Wednesday, June 21, 2017

WTIC West Texas Intermediate Crude Oil Daily Chart; Oil Descends Into Bear Market; Lower Band Violation; Oversold; Positive Divergence

Keystone highlighted the Death Cross when it occurred at the end of May and early June. All the oil bulls that were long oil from 50 pooh-poohed the Death Cross laughing at anyone that pays attention to such foolish chart indications. Well, they are not laughing anymore as they sit in front of the computer shirtless with oil printing a 42-handle.

The drop from the February top at 55 to yesterday's low at 43 is a -22% drop. The price sits at 43.51 in the chart which is a -21% drop from the top. Oil is officially in a bear market. When a stock or index falls -10% that is deemed a correction. A drop of -20% is a bear market. Thus, oil has dropped from the correction phase into bear market territory.

Now that oil has plummeted, the silly humans are wringing hands and professing that oil is doomed going forward. Of course that negative sentiment and the chart indicators above will bounce price in this daily time frame. The indicators are universally positively diverged (green lines) as price prints a new low signaling that price wants to bounce and recover to take a breath from the massive drop. The stochastics are oversold also agreeable to a bounce.

Price has violated the lower standard deviation band (purple) so the middle band at 47.15 and dropping is on the table. The middle band, which is also the 20-day MA, is falling sharply and will likely line up with that 45.50 resistance level. The positive divergence may bounce oil price to the 44.4-45.5 area over the coming days. Keystone does not hold any positions in the oil patch currently.

Oil is at levels not seen since last November. Moving under 42 will likely send the price to 37-38. The oil bulls have a shot at stabilizing prices if they can maintain this sideways range at 42-46 for a few weeks. 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 Thursday Morning, 6/22/17: WTIC continues slipping lower yesterday down -2.2% to 42.53. Currently, oil is at 42.79. The MACD line makes a lower low on the daily chart so the psoitive divergence on the other indicators should bounce price, in the daily time frame, then price will likely come down once again, at that time a more firm base is likely for the daily time frame (so a day or two of up then a day or two of down then several days of up). Oil is likely headed for lots of choppy sideways action. If short the last couple weeks it is likely best to exit the trade. OI is not attractive long or short now since choppy sideways is likely the direction ahead. Brent oil joins WTIC in bear market territory. Brent oil is now down more than -22% off its February top.

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