Oil Technical Update
Brent Crude 8/29/2012 1H Chart 10:10PM EDT
Brent Crude Oil prices had a key break below a rising channel support during the 8/27 session. Since then, this market has found support near the 111.55 level and has been trading in a sideways manner, with resistance roughly at 113.10. The 8/29 European-US session appears to be focused to the upside of this range. If a rally does push higher than the 113.10 level, we can still look for resistance factors near 114-114.05.
The 1H Brent Crude chart shows that the psychological handle of 114, there is a declining trendline connecting back to the 116.33 high from August 23. The 200-Hour SMA also resides here. Furthermore, in a bearish market for the 1H time-frame, the 1H RSI should respect the 60 level as resistance. If it does, and then fall back below 40, price action is likely to be in bearish continuation.
As we noted last time, if the market pushes below the 200-day SMA, which would probably require clearing the 111.50 handle, Brent crude opens up a bearish outlook toward 105.70, 38.2% retracement.
Correlation to USD/CAD: This bearish outlook would hint at a bullish outlook for USD/CAD, which right now has a bearish stance. Weakness in oil can help USD/CAD find support at 0.9840. If oil pushes above 114.05 however, we are probably going to see USD/CAD slide toward the 2012-low at 0.98.
Brent Crude Daily Chart 10:15AM EDT
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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