Oil Technical Update
Brent Crude Oil 9/24/2012 4H Chart 7:50AM EDT
Pullback, more upside risk? Brent Crude pulled back sharply from the just above the 107.00 handle and has so far stalled at the previously broken range support near 111.50. Will the market maintain the previous consolidation range as a top? So far price is showing respect to the range. But there could still be further upside within the bearish scenario. If another correction swing develops, it should really hold under 113.70-113.80 area. Here is the 200-4H-SMA, and the 61.8% retracement of the 117.92-107.09 swing.
The 4H RSI reading should also hold below 60, now that it has tagged 70, in order to reflect persistent bearish momentum developing. A break above 114, should refocus the market to the 117.90-118 area.
Bearish extension: If the topping is confirmed, and brent crude continues to slide below 107.00, the next support might be 103.20, 50% retracement, or even lower at the 102.05 support/resistance pivot. Such a scenario would probably take away the bullish momentum in the daily chart, as the daily RSI reading should then clearly fall below 40, and possibly tag 30. IF this scenario does materialize, the 107-107.10 area should probably be monitored for resistance upon the next pullback.
Loonie: The slide in oil should be correlated to a fall in CAD price as well. Currently the USD/CAD is rallying above 0.98, with 0.9840-0.9850 to watch as possible resistance. Above that, 0.9950 resistance pivot, and even parity will be exposed.
Brent Crude Oil Daily Chart 7:55AM EDT 9/24/2012
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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