Tech charts signal a major spike in Brent crude in coming weeks

15APR2018

BRENT CRUDE SHOWING ALL SIGNS OF INCHING HIGER IN COMING WEEKS

Professional Technical Analysts often argue if you know your Charts well, you can see much beyond the price. It is sometimes wonderful to see that even if one is not completely aware of the fundamental inputs; Market Participants know it all and it all gets discounted in the price. In other words, Charts reflect all. The fundamentals picture, the psychology and the consensus of the Market Participants.

Once such good example is the Brent Crude.  The below picture shows how the total Oil inventories of the OECD countries peaked in 2016 and after that it shows how consistently it has dropped ever since. When compared against their 5-year averages, the OECD stocks are seen consistently reducing and very near to getting into negative.

One would not require Einstein’s brain to understand that the glut of stored oil among industrialized economies – which helped keep prices low for years – has shrunk after production cuts by OPEC and Russia. This has not only set prices higher but it  is likely to push it higher significantly over coming week.

This gets wonderfully reflected on the Technical Charts. Let us examine the Weekly Technical Charts of Brent Crude and see how wonderfully it corroborates the above picture and reflects all that we discussed above. 

The below  Chart gives several indication which point towards up move in prices of Brent Crude over coming weeks.

·         A  Golden Cross is seen with 50-Period Moving Average crossing the 200-Period Moving Average from below. This often signals initiation of a prolonged up move in prices

·         After good accumulation, a big white candle appearing near the 20-Period Moving Average point towards attempt for a fresh break out.

·         On Balance Volume – OBV is moving towards a fresh high while the prices consolidate. This shows inherent buoyancy.

·         Prices ended above their upper Bollinger band. Though some temporary retracements inside the bands may be seen but this also point towards likely initiation of a fresh up move in prices.

It would be no surprise if we see Crude prices moving higher over coming weeks.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)

Milan Vaishnav, CMT, MSTA

Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)

Member: 
CMT Association (Formerly known as Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Society of Technical Analysts (STA), UK 
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

+91- 70164-32277  /  +91-98250-16331  
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com

MARKET OUTLOOK FOR MONDAY,APR 16, 2018

MARKET OUTLOOK FOR MONDAY,APR 16, 2018

Indian Equity Markets continued with its winning streak on Friday as well as the benchmark index NIFTY inched up further and ended the day with net gains of 21.95 points or 0.21%. Despite the Markets ending with modest gains, the Markets have started to show some signs of consolidation. Few signs of some fatigue are evident and there are bright chances that the Markets may take some breather for a while before it prepares to continue with its up move again.

Apart from the fact that the Markets looks little tired and overstretched on Daily Charts, the strikes on Syria carried out jointly by US, UK and France are likely to infuse some volatility in the global trade as well once again. However, these jitters may be short lived but in any case the present structure of the Charts point towards from highly probable range bound consolidation.

The Monday will see levels of 10535 and 10560 will act as immediate resistance levels for the Markets. Supports come in at 10430 and 10410 zones.

The Relative Strength Index – RSI on the Daily Chart is 59.4349 and it has continued to mark yet another 14-period high which is bullish. RSI remains neutral to the price showing no divergence. Daily MACD stays bullish while trading above its signal line. No significant formations were observed on Candles.

Pattern analysis show some indicators which are little overstretched. They do not hold any potential to trigger any significant downsides in the Markets. However, they certainly can push the Markets into some consolidation in the immediate short term.

Overall, there are some chances of global trade triggering some volatility but in any case, the consolidation is what is expected and no major downsides are seen. Whatever volatility that we may witness is expected to remain range bound. We advise to keep overall exposures moderate at higher levels and vigilantly protect profits as well. Downsides, if any, will present opportunity to make quality purchases once again.

STOCKS TO WATCH:

Long positions were seen being added in NATIONAL ALUMINUM, RCOM, HCC, ASHOK LEYLAND, IDFC BANK, TECH MAHINDRA, SAIL, HINDALCO, KPIT, COAL INDIA, NTPC, ESCORTS and FEDERAL BANK.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)

Milan Vaishnav, CMT, MSTA
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)

Member: 
CMT Association (Formerly known as Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Society of Technical Analysts (STA), UK 
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

+91- 70164-32277  /  +91-98250-16331  
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com