FXTimes Technical Update

Previous: Brent Crude Oil Has a Double Top Formation; Scope for 100 if 108.50 is Broken (9/11)

Brent Crude

Brent

Oil prices have been riding a bullish run with equities in this last couple of weeks, but is at a key technical level as it hovers above 111.00 and almost hit 130. The daily chart shows several resistance factors at hand.

1) We have a declining wedge resistance near 113.
2) The 200-period simple moving average resides just above 111.00.
3) The 112.79 level is 50% retracement of the entire wedge from the 126.94 high to the 98.64 low.
4) The RSI reading is at 60 - if the market is bearish this is an RSI level that should provide resistance as it has done 6/14, 7/8 - 7/22, and lastly 8/31 and 9/7 - 9/8. However, note that the last RSI slide fail to tag 30, so the bearish continuation momentum is weak.

As far as price action, we have a doji in the previous daily candle, reflecting indecision. Now while it may be imprudent to simply try to catch a top of this bull swing, it might be equally unwise to predict a break above 113. I would consider both of these naked trades. At this point, if the market can give us a consolidation pattern where we can see support and resistance, a breakout of that consolidation around this cluster of resistance would be a helpful hint. A break above would first target the 116-116.13 area containing a support/resistance pivot and 61.8% retracement. Then, 120.80-120.90 contains the next s/r pivot as well as 78.6% retracement. Above that opens the 126.94 origin and high of wedge pattern.

The 4H chart shows a way we can consider the bearish outlook. If the market pushes below the 200 period simple moving average as well as the 107.45-107.50 pivot zone, we would not only show a top but break below a rising trendline. This opens up the 100 psychological pivot, especially if the market pulls back and shows respect of the area around the 200 SMA as resistance. The RSI reading in the 1H chart should also break below 40, and preferably dip below 30 to reflect bearish momentum (at which point we might be already very close to our 100 target.

A break to the upside can be confirmed as well with a throwback that fails to break back below 112.

brent

 

 

 

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