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Tuesday, November 11, 2014

WTI and Brent Crude Oil charts: bears continue to rule

WTI Crude chart

WTI Crude_Nov1014

In the previous post on the daily bar chart pattern of WTI Crude oil, bearish technical indicators were suggesting further downside. A test of the Jun ‘12 low of 77.50 had seemed likely.

Oil’s price consolidated sideways – touching lower tops, but receiving good support from the 80 level. However, on the first two trading days in Nov ‘14, oil’s price dropped on heavy volumes to breach the 77.50 level and touch an intra-day low of 76.

Positive divergences visible on technical indicators – which touched slightly higher bottoms while oil’s price dropped lower – led to a brief rally that stalled at the 80 level. It was a proof of the ‘rule’ that a support level breached on high volumes usually turns into a resistance level.

All three EMAs are falling and oil’s price is trading below them in a clear example of a long-term bear market. Technical indicators have corrected oversold conditions, but remain in bearish zones.

On longer term weekly chart (not shown), oil’s price has closed below its 200 week EMA for ten straight weeks. Weekly technical indicators have fallen deeper in their respective oversold zones. The 50 week EMA is about to cross below the 200 week EMA and technically confirm a long-term bear market. The next lower target is 70.

Brent Crude chart

Brent Crude_Nov1014

The daily bar chart pattern of Brent Crude oil consolidated sideways after touching an intra-day low of 83, and managed to touch an intra-day high of 88 for the second time in two weeks.

Bears reasserted their dominance. Oil’s price dropped to a new intra-day low of 81 on strong volumes. Positive divergences visible on all three indicators – which touched higher bottoms while oil’s price dropped lower – led to a brief rally that stalled at the 85 level.

MACD, RSI and Slow stochastic are in their respective oversold zones – where they can remain for long periods during a bear phase. All three EMAs are falling and oil’s price is trading below them in a bear market.

On longer term weekly chart (not shown), oil’s price has closed below its 200 week EMA for thirteen weeks in a row. Weekly technical indicators remain oversold. The ‘death cross’ of the 50 week EMA below the 200 week EMA has technically confirmed a long-term bear market. The next lower target is 75.

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