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Tuesday, August 12, 2014

WTI and Brent Crude Oil charts: bears tighten their grips

WTI Crude chart

WTI Crude_Aug1114

In the previous post on the 6 months daily bar chart pattern of WTI Crude oil, a strong bear attack had pushed oil’s price briefly below its 200 day EMA. Daily technical indicators were looking oversold, and a bounce up in price was expected. However, weekly technical indicators were looking bearish – which indicated some more correction or consolidation.

Shortly after the previous post, oil’s price dropped to an intra-day low of 99 before bouncing up above all three EMAs to touch an intra-day high of 104. Bears availed the opportunity to sell. Oil’s price dropped below its 200 day EMA once again, and fell almost to 96, before moving up to close above the 97 level.

Note the strong volumes on down days that indicate a strong bear grip. By touching a lower top and falling to a lower bottom, the bearish pattern of ‘lower tops and lower bottoms’ of the past 2 months continues. The 20 day EMA has crossed below the 200 day EMA. If the 50 day EMA follows suit, the ‘death cross’ will technically confirm a bear market.

Technical indicators are looking bearish and oversold, but showing mild signs of recovery. MACD and Slow stochastic are trying to emerge from their respective oversold zones. RSI received support from the edge of its oversold zone, but remains below its 50% level. Any attempt at a rally may cause renewed bear selling.

On longer term weekly chart (not shown), oil’s price is trading below its 20 week and 50 week EMAs and just 3.50 points above its rising 200 week EMA. A test of support from the 200 week EMA is a possibility. Weekly technical indicators are looking bearish. Some more correction or consolidation is likely.

Brent Crude chart

BrentCrude_Aug1114

The 6 months daily bar chart pattern of Brent Crude oil has spent a whole month below its three EMAs in bear territory. The ‘death cross’ of the 50 day EMA below the 200 day EMA has technically confirmed a bear market. All attempts at rallies are getting thwarted by the falling 20 day EMA.

Daily technical indicators are bearish, but trying to correct oversold conditions. MACD is below its signal line and moving sideways inside its oversold zone. RSI received support from the edge of its oversold zone, but is sliding down. Slow stochastic has emerged from its oversold zone, but may slip back again.

On longer term weekly chart (not shown), oil’s price has dropped below its 20 week and 50 week EMAs and testing support from its 200 week EMA. Weekly technical indicators are looking bearish, and showing negative divergences by falling below their Mar ‘14 lows. The long-term bull market is under threat.

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