Gravestone doji pattern
WTI (West Texas Intermediate) crude oil futures for June delivery show the emergence of the gravestone doji pattern on May 7, 2015. Slowing US production, declining inventory, and falling rig counts support crude oil prices’ rally. However, massive production from Saudi Arabia, Iraq, and Russia as well as a global surplus of 1.5 MMbpd (million barrels per day) could drive oil prices lower.
The strong technical momentum could drive oil prices. The key resistance is seen at $66 per barrel. Oil prices hit this level in May 2009. The depreciating dollar would support crude oil prices. The consensus of improving demand from China and India should support oil prices.
In contrast, oversupply factors could drive oil prices lower. Long-term bearish sentiments could drive oil lower to the support of $55 per barrel. The support is formed from the lows of April 21 and 22, 2015.
The gravestone doji pattern signals a reversal of crude oil’s price movement. The candlestick pattern forms at the peak of a trend and suggests the reversal of a trend. WTI oil June futures contracts are trading above the 20, 50, and 100-day moving average. This signals strength. The technical patterns suggest that prices could hit levels of $63–$64 per barrel. In contrast, the RSI (relative strength index) is signaling a possible correction.
ETFs’ performance, like the VelocityShares 3X Long Crude ETN (UWTI), improves with increasing crude oil prices. In contrast, lower oil prices benefit ETFs like the ProShares Ultrashort Bloomberg Crude Oil (SCO).
Higher oil prices are positive for oil and gas companies like Synergy Resources (SYRG), Pioneer Natural Resources (PXD), and RSP Permian (RSPP). They account for 4.52% of the SPDR Oil and Gas ETF (XOP). These stocks have a crude oil production mix that’s more than 46% of their total production.
For the latest updates, visit Market Realist’s Crude Oil ETFs page.