By Deepak Rangan
Crude oil price charts are appearing to be very vulnerable to downside movement as multiple technical indications all combine to present a bearish outlook.
Prices have formed a double top (see chart below) over the last 2 months and the most important fact is that the RSI has exhibited a divergence at both the price peaks- a good sell signal.
But what makes the signal more valid is that prices have been forming a descending triangle pattern (green line) with a base around $98/barrel.
Prior price low was around $94/barrel. Since this price level has acted as support in previous circumstances, we can expect similar price action this time also. Long term support lies in the $70-$75 area, a pretty solid support zone.
On the fundamental side, the outlook is bullish given that Iran is threatening to immediately stop all crude oil exports to certain nations ( read EU region).
So even if one takes a sell position based on technicals, it would be nice to keep an eye on the developments in Iran.
