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Tuesday, May 12, 2015

WTI and Brent Crude Oil charts: strong bear market rallies petering off?

WTI Crude chart

WTI Crude_May1115

The daily bar chart pattern of WTI Crude oil bounced up after touching a low of 42.50 in Mar ‘15. After facing brief resistance at the 54 level, oil’s price rallied to touch a high of 62.50 on May 6 ‘15 – gaining 47% in less than 2 months.

However, oil’s price formed a ‘shooting star’ candlestick pattern (long upper body, open and close near day’s low) – which is often a sign of trend reversal - and corrected down below 60.

The 20 day and 50 day EMAs are rising together, and oil’s price is trading above them. That indicates medium-term bullishness. But the 200 day EMA is falling, and oil’s price is trading below it in a bear market.

In the previous post, a ‘support-resistance zone’ between 47.50 and 54 was marked on the chart. That zone should provide support in case oil’s price corrects some more.

Daily technical indicators are correcting overbought conditions. MACD has crossed below its signal line, and looks ready to drop from its overbought zone. RSI faced strong resistance from the edge of its overbought zone, and has dropped down. Slow stochastic formed a ‘double top’ reversal pattern inside its overbought zone, and dropped sharply to its 50% level.

Some more correction is possible.

On longer term weekly chart (not shown), oil’s price crossed above its 20 week EMA, but is trading below its 50 week and 200 week EMAs in a long-term bear market. Weekly technical indicators have corrected oversold conditions, but giving mixed signals. MACD is showing good upward momentum in negative zone. RSI is moving sideways just below its 50% level. Slow stochastic is inside its overbought zone, but has started falling.

Brent Crude chart

BrentCrude_May1115

The daily bar chart pattern of Brent Crude oil had touched a low of 46 back in Jan ‘15. It has been rallying since then – forming a ‘double top’ at 63 in Feb ‘15, correcting down to 52.50 in Mar ‘15, and then touching a high of 69.50 on May 6 ‘15 – gaining 50% in 4 months.

However, it formed a ‘reversal day’ pattern (higher high, lower close) – which may be the sign of an intermediate top – and corrected down below 65, where it is receiving support from its 20 day EMA.

The 200 day EMA is falling and oil’s price is trading below it in a bear market - despite the strong rally during the past 4 months.

Daily technical indicators are correcting overbought conditions. MACD has crossed below its signal line, and dropped from its overbought zone. RSI faced resistance from the edge of its overbought zone, and is falling towards its 50% level. Slow stochastic has dropped sharply from its overbought zone to its 50% level.

Some more correction seems likely.

On longer term weekly chart (not shown), oil’s price crossed above its 20 week EMA, but is trading below its 50 week and 200 week EMAs in a long-term bear market. Weekly technical indicators have corrected oversold conditions, but giving mixed signals. MACD is showing good upward momentum in negative zone. RSI has slipped down after facing resistance from its 50% level. Slow stochastic is about to drop down from its overbought zone.

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