I had analysed Crude Oil Chart (on MCX) a few days back when it was at sub-4800 levels. Later on it shot up to a recent high of Rs 5822 (yesterday) before closing lower.
Yesterday's formation is technically called a 'doji' in candlestick terminology and suggests a possibility of a reversal.
You would have noted that the earlier when the price was below Rs.4800/- 'negative divergence' on the RSI and MACD though visible, was not 'confirmed' by way of a swing break out and hence we saw the rally from Rs 4800 to Rs 5800 .... ( The swing break rule is explained in detail in my Book)
Whether yesterday's doji turns out to be a reversal or not , time will tell; but I would be strongly biased towards the down side till the price breaks the recent high.
This should then be good news for HPCL / BPCL / IOC all of which were up today (Friday) inspite of a further 250 point fall in the Sensex.
Happy trading !
CA Rajiv D Khatlawala
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