Oil Technical Update

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Brent Crude Daily Chart 3:30PM EDT
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After confirming an inverted head and shoulder pattern in July, Brent Crude has been trading in a rising channel, seen in the daily chart. The rally has picked up bullish momentum in the daily chart, but in the short-term might be a bit oversold and exhausting as the daily RSI and price action shows a slight divergence at 70.

The 116.33 level is also a previous support pivot from 2/10 and 4/18. To the left of the daily chart, this was also a resistancepivot on 11/8/2011, which was the high for a half-year consolidation period between August 2011, and February 2012. You can also see that as price nears this pivot, it is also testing a declining trendline that goes back to the February and 2012 high at 128.15

Will the market break to the next pivot at 120.50? Or will it at least need some correction back to a recent support in the 111-111.10 area, or perhaps test the rising channel support?

A hold above 114 favors the bullish break scenario, while a break below introduces flat to bearish action. A break below112.70 then shows topping - a double top -in the 4H chart. However only a break below the rising trendline and the 111handle should introduce the bearish outlook. This 111 area is also the 200-day SMA. Fianlly, note that the bullish momentum remains in this 4H chart if the RSI remains above 40 as it has done throughout the rising channel.

Brent Crude 4H Chart 3:35PM EDT
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Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes - provider ofForex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.