Tuesday, January 2, 2018

WTI and Brent Crude Oil charts: breakout above consolidation zones to touch 2.5 yr highs

WTI Crude Oil chart


The daily bar chart pattern of WTI Crude Oil broke out above the 'symmetrical triangle' pattern within which it was consolidating for 5 weeks. The possibility of such an upward breakout was mentioned in the previous post

An explosion on a Libyan crude pipeline triggered by armed assailants on Tue. Dec 26 cut Libya's oil production by 100,000 barrels per day. The news may have aided the upward breakout.

Note that volumes during the upward breakout was not significantly higher - a required condition for a technically valid upward breakout. Perhaps a truncated trading week due to Christmas holidays and year-end considerations contributed to the lower volumes.

Oil's price ended the week, month and year at a 2.5 years high of 60.42. All three EMAs are rising, and oil's price is trading well above them in a bull market. 

Daily technical indicators are in bullish zones, but showing negative divergences by failing to touch new highs with oil's price. Slow stochastic is looking overbought. 

A pullback towards the top of the 'symmetrical triangle' is a possibility. Bulls may use the dip to buy.

On longer term weekly chart (not shown), oil's price closed above its three weekly EMAs in long-term bull territoryWeekly technical indicators are looking overbought and may trigger a pullback towards the 200 day EMA.

Brent Crude Oil chart


The following remark was made in the previous post on the daily bar chart pattern of Brent Crude Oil: "Some more consolidation within the 'rectangle' is likely before an eventual breakout."

The expected upward breakout occurred on Tue. Dec 26. News of an explosion on a Libyan crude oil pipeline may have triggered the breakout, but muted volumes failed to technically validate the breakout.

Oil's price ended the week, month and year at a 2.5 years high of 66.87. Daily technical indicators are looking bullish but showing negative divergences by failing to touch new highs with oil's price. A pullback towards the top of the 'rectangle' is a possibility.

On longer term weekly chart (not shown), oil's price closed above its three weekly EMAs in long-term bull territoryWeekly technical indicators are looking overbought. Slow stochastic is showing negative divergence by failing to touch a new high.

No comments: