Oil Technical Update
After failing to break above the 2011 high of 126.65, Brent crude is retreating. The daily chart shows this market resolving overbought conditions as the RSI was above 70 when it showed a bearish divergence with price. Also, the market was trading at the upper bollinger band (3 standard deviations from the 200-day simple moving average).
Looking at the daily chart we see a previous resistance zone between 115 and 116.50.
The market is at the cusp of developing a reversal that could target this now to be tested support zone. The 4H chart shows that the the RSI is hovering above 40. In a bullish market it should remain above 40 and push back above 60. Therefore, a push below 40 in the 4H RSI reading is a good clue that the bullish momentum is exhausted. Also, a break below 121.00 should give us a top and open up a reversal outlook toward 116.50.
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