Brent Crude Oil Corrects Lower After Hitting Resistance at 74.15

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Brent oil traded lower yesterday, after it hit resistance at 74.15, a level last seen on the 27^th of November 2014. However, the slide was stopped near the 72.75 support, marked by the peak of the 11^th of April. The price continues to trade above the long-term uptrend line drawn from the low of the 21^st of June 2017 and thus, the broader upside path remains intact in our view. As for the short-term picture, we believe that it is positive as well. On the 4-hour chart, the price structure remains of higher peaks and higher troughs above all three of our moving averages, which point north.

If the bulls manage to take the reins from current levels, then we may see them aiming for another test near the 74.15 barrier, the break of which may pave the way for the psychological zone of 75.00. Another break above 75.00 could open the way for our next resistance of 76.75, marked by the inside swing low of the 14^th of November 2014.

Taking a look at our short-term oscillators, we see that the RSI, already above 50, has turned up again and looks to be headed near its 70 line. However, the MACD, although positive, lies below its trigger line. What’s more, there is negative divergence between this indicator and the price action. We would like to see the MACD turning up and crossing back above its trigger line before we get more confident on larger bullish extensions.

On the downside, a dip below 72.45 could confirm the negative divergence between the MACD and the price action, and could signal the beginning of a bigger corrective phase. Such a dip may see scope for downside extensions towards our next support of 70.70.

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Article written by Charalambos Pissouros, Senior Market Analyst at JFD Brokers

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