Brent Crude Oil has continued to outperform the rest of the energy complex as it benefits from the mounting tensions in the Persian Gulf. Brent futures are trading at a healthy $15 per barrel premium to the US Crude Oil futures, and are flirting with the $120 level once again. Some signs of a near term top did materialize in last week's trading with the successful retest of the Channel Up chart pattern which has defined the most recent uptrend. This pattern is shown here on Autochartist as emerging pattern to be followed closely for trade opportunities to present themselves.
From the steady march from the last swing low near the $109.00 per barrel level, Brent made a short term top at the Channel Up resistance shown near $118.50 to form the upper boundary of the pattern. Mild weakness since this top was put in place encourages the possibility of a near term pullback to the rising support trend line near $112.00 per barrel. This would be a small retracement of about $4 from Friday's closing price. If tested with strength entering the market, this would present a potential buying opportunity ahead of the next leg up inside of the channel.
An alternative development would be for a resurgence in the price, with the current shallow retracement giving way to a rally above the Channel Up chart pattern and a trade above the $119 per barrel level. This would be an exceedingly bullish development as the price exits the pattern on an upside breakout. From there, Autochartist will generate a forecast that may reach easily into the mid-120 range. Overall the trend for higher prices in the market appears to be formidable. To entertain thoughts of long term weakness, the price would have to slip through the trend line support at the $112.00 level and generate a sell signal on the confirmed failure of the Channel Up pattern. Without such bearish action developing, even broadly sideways action from here will hold the uptrend intact and set the stage for another new high inside the channel.
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