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United States Brent Oil ETF Message Board

  • keybotthequant keybotthequant Jun 13, 2011 7:56 PM Flag

    BNO and USO Divergence Chart

    BNO and USO Chart Comparison.

    WTIC Oil and Brent Oil Divergence Chart and Technical Analysis:

    West Texas Oil dropped today as Brent climbed. This divergence started late last summer when Chairman Bernanke saved the equities markets with QE2. The North Sea has some supply issues so Brent jumped today. Cushing has oil coming out their ears, now storing it in coffee cans and five gallon buckets and even in ten gallon hats (exaggerating), so WTIC dropped.

    Both behave in sync, rising on the same days typically and falling on the same days typically, today was somewhat of an outlier. Let's take a look at their behavior nose to nose. The divergence has gotten out of hand now, Brent far above WTIC. Typically, when one ticker moves farther away from the zero line, that ticker will be the one that corrects the most when things settle down. Therefore, as time ticks along, look for Brent to experience a more severe correction than WTIC, in other words, Brent will fall in price by a higher percentage than WTIC.

    The chart shows the rising wedges that helped create the top and the subsequent spank downs in late April. Note how Brent took off like a rocket when the Middle East turmoil began in January/February but WTIC had more of a flat move before jumping itself, and this move created much of the divergence that continues today. Afterall, Brent is in their neck of the woods.

    Both oils exhibit two-leg bear flags, with the consolidation zone finishing up now, so the lower targets are shown by the colored dots. Again, however, Brent should have a higher percentage move down than WTIC moving forward, and, considering the bear flags, that move is probably beginning now. As China slows along with global softness, less enthusiasm for oil would be prudent.

    For chart google keystone speculator.

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23.22-0.0400(-0.17%)Apr 17 4:00 PMEDT