1. Crude Oil (WTI)
Commodities | Technical Analysis
Tuesday, 8 March 2016
Did oil just stop slipping?
Crude oil (WTI) has been moving in a long-term downtrend, reaching its lowest level last February at 28.74.
However, a glimpse of light at the end of the tunnel is starting to emerge, signaling a near correction
upwards. Here are some facts to back that up.
Daily Chart
The daily chart shows oil moving in a downtrend, reaching 28.76 before rebounding towards 36.28. That top
forced it back down to form another bottom at 28.74, which is approximately around the same level as the first
bo om. It held ground there and rebounded to form a sideways channel between approximately 28.70 and
36.30. Breaking above the upper line of the aforemen oned channel will indicate con nua on towards its
projected minimum target around resistance zone 42.00-43.00.
Looking at the RSI at the same move, we see a posi ve divergence. As oil formed its previous bo oms flat
around the same levels (28.76 and 28.74), the RSI formed two successive higher lows.
Subsequently, oil closed almost at the same level of its previous high, while the RSI just surpassed its
previous corresponding high in addi on to crossing over its 50 line, which adds more weight to the
probability of a close rebound.
Weekly Chart
2. The weekly chart shows the long-term downtrend, recording its lowest level at 28.74 last February. However,
signs of a possible correc on started to materialize when the RSI started to divert by making higher lows,
while oil kept heading north.
As shown above, the first bo om was around Q1 2015; the second was in Q3 2015; and the third was the latest
bottom recorded last February. All the while, the RSI kept recording higher corresponding lows.
No ce also how the RSI rebounded off of its uptrend towards its previous high, indica ng a near rebound for
the oil as well. But not to put the wagon before the horse and say the oil is targe ng its previous top,
targeting its previous weekly bottom at 41.93 would suffice for now.
Conclusion
Crude oil (WTI) is set for a good correc on, breaking free from the price sideways channel to the upside
towards resistance zone 42.00-43.00, backed up by posi ve RSI divergence on both daily and weekly me
frames.
Mona Hassan, CFTe
Senior Technical Analyst
Mubasher International
Mona.Hassan@MubasherFS.com
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I (we) Mona Hassan, Senior Technical Analyst, employed with Mubasher Interna onal, a company under the Na onal
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