Brent Oil outlook: Bears take a breather after 15% drop in past three days

Slobodan Drvenica Windsor Brokers

Brent Oil

Brent edges higher in early Thursday’s trading after suffering heavy losses in past three days (only on Wednesday Brent lost over 9% of its value).

Partial profit taking lifted the price from new multi-week low ($93.40) after a sharp fall was contained by significant technical supports provided by 50% retracement of $70.13/$117.43 rally / converged and ascending 100/200DMAs / daily cloud base).

The latest drop was sparked by renewed optimism that peace talks may lead towards further easing of tensions or even the end of US/Iran war, although traders are still cautious as geopolitical situation remains fragile amid existing threats of fresh escalation.

Technical picture has weakened significantly following break of strong supports at $100 zone (psychological / trendline support / daily cloud top) accompanied with strengthening of negative momentum and formation of 10/20DMA bear-cross).

Oversold stochastic, on the other hand, contributes to signals of correction, which should be limited (if current optimistic view persists) and offer better levels to join bearish market.

Broken $100 zone reverted to significant resistance which should ideally cap upticks (also marking the fourth, corrective wave, of five-wave cycle from $117.40 peak.

Res: 96.92; 100.00; 100.61; 102.03.
Sup: 93.62; 92.78; 90.00; 88.19.

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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