Amazon deals

Tuesday, June 23, 2015

WTI and Brent Crude Oil charts: an update

WTI Crude chart

WTIC_Jun2215

The daily bar chart pattern of WTI Crude has been consolidating sideways for the past 2 months within a ‘pennant’ (narrow triangle) pattern. A ‘pennant’ (like a triangle) is usually a continuation pattern. So, the likely break out from the pattern should be upwards.

However, triangles are unreliable patterns. That means that the price break out can be downwards; or, there may not be a break out at all. Oil’s price may continue to consolidate sideways and eventually pass through the apex of the ‘pennant’.

In the latter case, the price level of the apex of the ‘pennant’ is likely to turn into a ‘support-resistance’ level.

Oil’s price is trading above its rising 20 day and 50 day EMAs but below its sliding 200 day EMA in a bear market. A convincing break out above the ‘pennant’ may propel oil’s price above its 200 day EMA into bull territory. A drop below the ‘pennant’ will restore control to bears.

Daily technical indicators are in bullish zones but not giving any clear signals – which is often the case during sideways consolidations. MACD is entangled with its signal line and sliding down in positive zone. RSI is moving sideways just above its 50% level. Slow stochastic has dropped down after facing resistance from the edge of its overbought zone.

On longer term weekly chart (not shown), oil’s price has spent 10 weeks above its rising 20 week EMA, but is trading well below its falling 50 week and 200 week EMAs in a long-term bear market. Weekly technical indicators are looking bullish. MACD is rising above its signal line in negative zone, but its upward momentum is slowing down. RSI has just crossed above its 50% level. Slow stochastic is moving sideways inside its overbought zone.

Brent Crude chart

BRENT_Jun2215

The daily bar chart pattern of Brent Crude oil has been consolidating sideways within a ‘falling wedge’ pattern during the past 2 months. Though oil’s price is trading below its three daily EMAs in a bear market, the ‘falling wedge’ has bullish implications.

That means the likely break out from the wedge pattern is upwards. An upward break out should be accompanied by a volume spike, otherwise the break out may turn out to be a ‘false’ one. Note the strong volumes during recent down-days, but the selling appears to have been well absorbed.

Daily technical indicators are looking bearish. MACD is entangled with its signal line in negative zone. RSI and Slow stochastic have dropped below their respective 50% levels. Some more consolidation within the wedge is likely.

On longer term weekly chart (not shown), oil’s price closed below all three weekly EMAs in a long-term bear market. Weekly technical indicators are turning bearish. MACD is above its signal line in negative zone, but its upward momentum has stalled. RSI is moving sideways below its 50% level. Slow stochastic has dropped down sharply from its overbought zone, but is above its 50% level.

No comments: