CRUDE OIL - negative Divergence !!!!

Crude Oil which touched a high of almost $120 in international markets has fallen heavily in last couple of days .

However signals were already available on the price charts of an 'impending downmove'.

The chart of Crude Oil on MCX clearly shows a 'negative divergence' on the RSI and MACD two commonly used indicators.

After touching a high of Rs 4785 it has fallen to current level of Rs 4500.Indications are strong that in coming days it may most likely test sub-Rs 4400 initially and then still lower levels of Rs sub-Rs 4200/-.

The divergences will be negated if price rises beyond 4800/- on MCX ( $120.50 equivalent)

The general consensus among analysts on major TV channels suggest $150 in the next few weeks, while the Price charts are saying something opposite!!

It will be interesting to track both - the analysts' target as well as the targets of the price charts

Happy observing ! (i presume not many of you trade in crude oil)

CA Rajiv D Khatlawala

I doubt 150, seeing the divergences its getting ready to follow gold on the downside, though I would be carefull putting stops on Rupee value as rupee has been depreciating consistently in the last few days, when it hit 120 $ rupee was 40.0x & today its above 40.6x

Dear Czar ...
Quite correct ...
As in case of other international commodities, it may be prudent to follow the international prices / price chart ... or alternatively adjust for the fluctuation in the domestic exchange rate....

CA Rajiv

LOT of froth regarding the statements coming out from the arab sheikhs.....high time ..... a slippage is surely there..

true oil may observe a 5th wave kindof fall which most equity market & gold has gone thru... now the bullish statements since last few days are seemingly being used to distribute, IMHO. personally i shorted at 118 & covered at 113, think tonite should watch closely for opportunity. breaking 110 will confirm...

hey Sudoku any magic levels from you ?

Owing to the way in which the RSI (or MACD or momentum/ROC or whatever price oscillator) is calculated, divergence "will" be visible when the prices fall-rise-fall again (positive divergence) or rise-fall-rise again (negative divergence). Why? Because the retracement causes averaging out of the indicator and the indicator moves upto central level.

Repost of:
It has no predictive ability, unless such an outcome is a function of random noise.

AH!!!

Wah ustad vah!!!!

Thank you dear OXY for that!!!

Nice chart and good observation Rajiv..
And
Oxusmorouz Wah ustad vah........!!!!

JAY

so it did make new high y'day night, looks like it will achieve 124 levels... have a good mind to build shorts with 125 stop...

Crude may go beyond 120. It is devastating the rupee. USD will rule the roost in Indian forex market for at least another two weeks I suppose - VVKB