Friday, October 24, 2014

WTIC West Texas Crude Oil Daily Chart Oversold Positive Divergence Lower Band Violation Price Extended to Downside

Oil had been tracking stocks in recent days but weeks before the relationship was actually divergent. The robust stock market rally occurs in recent days but overall the oil price staggers sideways. Yesterday, oil price receives the initial launch from the positive divergence (green lines) across all indicators that place a near term bottom. Keep your ey e on the wiggle on the MACD line but all-in-all the daily chart is at a near-term bottom. The lower standard deviation band (pink) was violated so price will want to move back to the middle band now at 86.45 and dropping.

The dots show price extended to the downside under the 20 MA, under the 50MA under the 200 MA so a mean reversion is needed (price moves higher). The resistance levels at 85 and 88 are logical upside targets and encompass the center band (20 MA). The weekly chart for WTIC is developing positive divergence but is not fully ready to place the sturdy bottom, therefore, the bounce on the daily above should continue but then oil price will likely top out in the short term days ahead in the 85-88 zone and roll back over to the downside to test the bottom again. This will allow time for the weekly chart indicators to set up with universal possie d so a firm and sustainable bottom can be placed.

Therefore, only nimble and speculative traders should be in oil. Price should ride higher in the days ahead but do not overstay your welcome if long since price will likely roll back over again and place perhaps a firm and sustainable bottom at 78-82 during November. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 5:18 AM on Saturday, 10/25/14: WTIC ends at 81.30 with a range of 80.36-81.95 during Friday. The analysis above is good to go. Looks like oil should have a recovery rally next week (short term only then the weekly chart will take over and weaken price again for a more firm and stable bottom in November).

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