WTI Crude chart
The following remark was made in the previous post on the daily bar chart pattern of WTI Crude oil: “There is a possibility of an upward bounce – which bears are likely to use to sell again.”
Note that oil’s price did bounce up for a couple of days (Jul 28 & 29) but failed to cross above the 50 level or test resistance from its rapidly falling 20 day EMA. Bears resumed their selling. Oil’s price dropped below 44, but bounced up a bit to close just below the 45 level.
Can we expect even lower prices? Daily technical indicators are suggesting as much. All three are in oversold zones – but there is no sign of any reversal patterns yet. There may be brief bounces due to short-covering.
The prospect of oil supplies from Iran entering an already over-supplied market and lower Chinese off-take should keep prices depressed for some time.
On longer term weekly chart (not shown), oil’s price has been falling sharply after forming a downward ‘gap’ in Jul ‘15, and is trading well below its three weekly EMAs in a long-term bear market. Weekly technical indicators are bearish and looking oversold.
Brent Crude chart
The following comment appeared in the previous post on the daily bar chart pattern of Brent Crude oil: “A drop below 50 can’t be ruled out.” Oil’s price dropped to a low of 48 before bouncing up to close just above 50.
Strong volumes on down-days is a sign of bear domination. The briefest of rallies – due to short covering – are being followed by heavy selling.
Daily technical indicators are in oversold zones, but can remain oversold for long periods during a bear market. The Jan ‘15 low of 46 may be tested and breached.
On longer term weekly chart (not shown), oil’s price has fallen off a cliff after forming a rare weekly downward ‘gap’ and is trading well below its three weekly EMAs in a long-term bear market. Weekly technical indicators are in bearish zones and looking oversold.