MCX Crude Oil on the brink to reverse
MCX Crude Oil Daily continuous chart
The benchmark WTI crude oil, in the last month of last year rallied and crossed the level of $55 per barrel after OPEC and Non- OPEC members agreed to cut down the production. However, in the following month the inventories suddenly spiked up despite the measures taken, thus making Crude oil vulnerable. After the events occurred, prices were moving in a range of $53-$55 per barrel and it continues to remain so, but how long?
MCX Crude showed massive gains last week when it crossed 3700 levels but it was short lived as it reversed on the same day, thus showing loss of momentum by buyers. The overall picture indicates that the resistance is now fixed at 3700 levels.
Technically speaking, prices has not discontinued the higher high and higher low formation. It is also above both the moving averages (20&50), giving an indication that the trend is positive. However, MACD has given a sell signal and RSI have started falling.
As per wave theory, ending diagonal is quite visible at the top which has also given a breakout on the downside. The trend will only change when the level of 3400 is taken out, thus opening negative possibilities.
In short, only the break of 3400 level will accelerate selling pressure which will drag prices lower till 3300 followed by 3150 levels.