Entering text into the input field will update the search result below

WTI Crude Oil To Slip Again?

May 15, 2011 9:20 PM ET
lytman02 profile picture
lytman02's Blog
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.
WTI crude oil, petroleum, ron acoba, rising wedge, hidden bearish divergence, commodities trading, energy and fuel

WTI crude oil suffered an unprecedented fall last week when it was dropped like it was hot from a high of $114.81 per barrel to a low of $94.65 in a matter of days. Since then oil prices have rebounded again. However, it appears that oil could bound for another dip in the near term.

As you can see from its 4-hour chart above, WTI crude oil looks to have formed a rising wedge pattern in its recent run-up. Technicians consider this this pattern as bearish since it generally just indicate a temporary rally in prices following a deeper descent. Notice also that is is already nearing the 50% Fibonacci retracement level, using its last high at $114.81 and the low of $94.65 as swing points. Additionally, the presence of a hidden bearish divergence, where the price makes lower highs and at the same time its stochastics register higher highs, suggests of a possible downbeat turnaround soon. Moreover, crude oil’s condition appears to be already overbought as indicated in its stochastics. A breakdown, therefore, from the rising wedge pattern could sent it back to its recent low.

More on LaidTrades.com ...

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.