Thursday, June 22, 2017

WTIC Oil Weekly Chart; Oversold; Positive Divergence Developing; Lower Band Violation

WTIC continues moving lower but this morning is attempting to steady itself at 42.77. Looking back, that green inverted head and shoulders (H&S) pattern is text book but after price broke above the neckline at 50 it was unable to remain above. The inverted H&S remains in play and the price action now can be considered  a new right shoulder forming. The head at 29 and neck line at 50 is a 21-point difference so a serious upside breakout would target 71.

Alas, oil prices sink lower. Price violates the lower standard deviation band so the middle band at 49.56, and falling, is on the table. The stochastics are oversold and the money flow is positively diverged wanting to see a bounce in the weekly time frame. This gels with the daily chart that is open to some recovery upside over the coming days.

However, the RSI and MACD line remain weak and bleak wanting lower lows in price after any bounce occurs. The indicators favor lots of sideways ahead perhaps through the white channel. Note the large selling volume over the last five weeks.

The expectation is for a bounce in the near-term any day forward and a week or so of up, then back down to the current lows and lower for a week or two after that and that price low may serve as the low for the weekly chart in that 41.0-42.5 range. Then prices likely move sideways to sideways higher going forward. The set up is not attractive for trading and Keystone has no positions in the oil patch since choppy sideways may be the path ahead. 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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