Oil Technical Update

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Brent Crude 9/3/2012 4H Chart 2:16PM EDT

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So much for the breakout we saw in Brent Crude to start last week. It remained above 111.50 throughout the week, spent some time in near-term consolidation, and then break up toward the the larger, short-term consolidation that started mid- August. This "larger" consolidation is roughly between the high of 116.36 and 110.85, or 111.50.

The market is now focused on the consolidation resistance. Note that the RSI in the 4H chart held mostly above 40, and is now back above 60, kissing 70, a sign that the bullish momentum from before persists and is intact.

The daily chart shows that if the market pushes above the 116.36 consolidation resistance, brent crude opens up some higher pivots.

First of all there is a previous resistance pivot at about 120.10, then a previous consolidation support pivot at about 121.10. A consolidation breakout projection using the width of the current consolidation into the direction of the breakout, also targets somewhere near the 121.10 level.

If this bullish extension develops, we should also expect the CAD to firm up.

Brent Crude Daily Chart 10:15AM EDT

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Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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