Brent is surging towards $105 – Will it break this bull flag?

Brent Crude, or black gold, as some may call it, is now surging by more than $5 since its little love tap to $98.6 dollars per bbl last night. 

As of the time of writing this article, Brent Crude is trading at $104.600 per bbl, kissing the top of the descending channel (or bull flag) and potentially threatening a breakout.

Should a breakout occur, the bull flag target is estimated at around $127, but the following areas are also appropriate targets:

• The 2026 highs at 110.195 to 113.635 could provide some resistance.
• The $120 psychological number could also be where participants could take profit.
• The actual target at around ~127, which is the height of the breakout after applying the flag pole of the pattern.

Now, since Brent crude is positively correlated with dollar strength, it would not be surprising to see DXY move up as well during this breakout.

In fact, DXY is already attempting to break its own resistance zone:

But don’t get too excited just yet, because ultimately, we need a clean daily close above the points of resistance.

For Brent, that is the bull flag’s upper trendline, and then holding it as support, and for DXY it’s the 100.82 – 101.92 zone.

What this would mean is that inflation risks stay active, and rates stay high across the board (US, EU, GB, JP).

Alternatively, if this was a fakeout, we’d need to see Brent print a clear rejection candle like a shooting star pattern, or a large red candle at the top of the flag.

This could theoretically bring Brent back to 98.6, or even towards the 90.185 – 95.485 support zone.

Naturally, this would create headwinds for DXY, by way of simply lowering the yields and rate hike odds even further.