Wednesday, October 7, 2015

WTIC West Texas Crude Oil Monthly Chart

The oil collapse was dramatic from the summer of 2014 to present. Price violated the lower standard deviation band for five consecutive weeks before taking the initial bounce. The RSI, histogram and stochastics are oversold and positively diverged so price bounces and is ready to bust up and out from the bullish falling green wedge. So the daily, weekly and monthly charts are encouraging for the oil bulls. Mix in a huge amount of short sellers that are running to cover and bingo, oil launches higher.

However, note the very interesting weak and bleak behavior with the MACD line and money flow making lower lows as price made the new low on this monthly basis. These two indicators would prefer to see price come back down after the happy rally runs its course. So oil may play around at 48-60 this month and November, maybe into December, but the monthly chart hints that oil will roll back over to the downside again and come all the way back down say as the year ends and into early 2016.

This behavior should it occur would be in keeping with an ongoing global disinflationary and deflationary environment well into 2016. 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.

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