Brent crude oil traded north on Wednesday, after it hit support near the 62.20 barrier on Tuesday. The black liquid continues to trade within the sideways range between 60.00 and 63.60, which contained most of the price action since January 15th, and although it is getting closer to the upper end, we prefer to remain sidelined for now. We would like to see a clear exit out of the range before we start examining its forthcoming directional move.
As we already noted, the price is now approaching the 63.60 zone, which is the upper bound of the aforementioned range, and also provided strong resistance back on December 4th and 7th. If the bulls prove strong enough to overcome that barrier this time around, such a move would confirm a forthcoming higher high and may initially pave the way for the high of November 21st, at around 64.75. Another break, above 64.75, may encourage buyers to put the 66.00 zone on their radars. That area proved to be a decent support during November 14th – 20th.
Looking at our short-term oscillators, we see that the RSI lies above 50 and points up, while the MACD stands above both its zero and trigger lines, pointing north as well. Both indicators suggest upside speed and support the case for some more advances, but we would stick to our guns and wait for a clear move above 63.60 before we get confident on further bullish extensions.
On the downside, a dip below 62.20 may signal that investors want to keep the price within the range for a while more. Such a dip could open the way for the 60.60 zone, or the psychological barrier of 60.00, which is also the lower end of the sideways range. That said, in order to start leaning to the bearish side, we would like to see a clear dip below 60.00. Such a break could pave the way for the 59.00 hurdle, the break of which may carry more bearish implications, perhaps paving the way towards the lows of January 7th and 8th, at around 57.30.
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