The following comments appeared in the previous post on the daily bar chart pattern of WTI Crude oil: "A technical bounce is likely - but there is still no sign of a bottom formation. That means even lower levels are possible ..."
Oil's price dropped with huge volumes to a new low of 27.50 on Wed. Jan 20 '16. It bounced up sharply to test resistance from its falling 20 day EMA before closing just below 30.
Daily technical indicators have corrected oversold conditions but remain in bearish zones. RSI is showing a bit of downward momentum. Bears are likely to resume their total control of the chart.
Iranian oil may be the proverbial last straw that breaks the back of an already oversupplied market. OPEC is doggedly refusing to cutback on production in their endeavour to close down competing US shale oil producers.
On longer term weekly chart (not shown), oil’s price is trading well below its three weekly EMAs in a long-term bear market. Weekly technical indicators are inside their respective oversold zones.
Brent Crude chart
The daily bar chart pattern of Brent Crude oil has lost its premium against WTI Crude oil, and both oil prices have been moving down in lock-step during Jan '16.
After slipping down just below 27.50 on Wed. Jan 20 '16 with a huge volume surge, oil's price bounced up sharply but failed to overcome resistance from its falling 20 day EMA and slid down to the 30 level.
All three daily technical indicators have recovered from their respective oversold zones, but their upward momentum is waning. Expect renewed bear activity.
Lower oil prices have been a bane of producing nations but a boon for consumers. However, if prices fall any further, it will eventually affect those who depend on business, investment and remittances from oil-rich nations in the Middle East.
On longer term weekly chart (not shown), oil's price is trading well below its three weekly EMAs in a long-term bear market. Weekly technical indicators are inside their respective oversold zones.