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Tuesday, March 7, 2017

WTI and Brent Crude Oil charts: still consolidating sideways due to supply glut concerns

WTI Crude Oil chart


The daily closing chart pattern of WTI Crude Oil shows a sideways consolidation with an upward bias for the past 10 weeks, and appears to have formed a 'rising wedge' pattern.

Oil's price is likely to correct downwards from the 'wedge'. Stronger volumes on recent down days are indicating that bears are sensing an opportunity to attack.

Daily technical indicators are looking bearish. MACD is sliding down below its signal line in positive zone. RSI has slipped below its 50% level. Slow stochastic has dropped to the edge of its oversold zone.

All three indicators are showing negative divergences by touching lower tops (marked by blue lines) even as oil's price touched a higher top. Some more consolidation is possible before oil's price makes a decisive move.

Oil's price is trading well above its rising 200 day EMA in a bull market. However, concerns about rising US shale oil output offsetting production cuts by OPEC and non-OPEC members have kept oil bulls on tenterhooks.

On longer term weekly chart (not shown), oil's price is trading above its rising 20 week and 50 week EMAs, but below its falling 200 week EMA in a long-term bear market. Weekly technical indicators are in bullish zones, but not showing any upward momentum.

Brent Crude Oil chart


The daily closing chart pattern of Brent Crude Oil has been consolidating sideways within a 'symmetrical triangle' pattern for the past 10 weeks.

'Symmetrical triangle' patterns are often continuation patterns. Since oil's price formed the 'triangle' after a sharp up move, the eventual breakout from the 'triangle' should logically be upwards.

However, a 'triangle' can be unreliable. So, oil's price may correct downwards.
There is also a possibility that the price continues its consolidation and emerges sideways through the apex of the 'triangle'.

In other words, one should wait for a decisive price action before taking a buy/sell call.

Daily technical indicators are looking bearish. MACD is sliding down below its signal line in positive zone. RSI is moving sideways in neutral zone. Slow stochastic is falling towards its oversold zone.

Oil's price is trading above its rising 200 day EMA in a bull market. Production cuts by OPEC and non-OPEC countries have not removed the supply glut in the oil market, keeping oil's price range-bound.

On longer term weekly chart (not shown), oil's price is trading above its rising 20 week and 50 week EMAs, but below its falling 200 week EMA in a long-term bear market. Weekly technical indicators are in bullish zones, but showing a bit of downward momentum.

1 comment:

Subhankar said...

Oil goes below $50 a barrel as US stocks build

https://in.news.yahoo.com/oil-goes-below-50-barrel-us-stocks-build-205403900.html