Brent Oil outlook: Peace deal optimism pushes the price to three-month low

Slobodan Drvenica Windsor Brokers

Brent Oil

Brent oil opened with a gap lower on Monday and fell to the lowest in over three months, deflated by fresh wave of optimism about the end of US/Iran war.

Two sides announced that they had reached an initial deal which should be signed next Friday.

Potential end of the war and reopening of strategic Strait of Hormuz provided strong relief after three-month conflict significantly hurt global energy supply and drained reserves (approx. 20 million barrels per day passing through Hormuz).

Technical picture on daily chart has weakened further, as the bear-leg that emerged after failure under psychological $100 barrier accelerated in past three sessions and registered weekly close below next strong supports at $90/$89 (round-figure / former higher base / 50% retracement of $58.70/$119.47 rally).

Strong negative momentum and converging 10/100DMAs, on track to form bear-cross, add to bearish outlook, though warning that bears may start to face headwinds comes from oversold stochastic and falling RSI touching the boundary of oversold zone.

Upticks in current environment should be limited and ideally stay below $90 zone, to provide better levels for re-entering bearish market.

Immediate support lays at $81.91 (Fibo 61.8%) / $80.00 (round-figure) followed by $77.74 (200DMA) and $73.04 (Fibo 76.4%) in extension.

Res: 86.08; 89.09; 90.00; 91.54.
Sup: 81.91; 77.74; 75.76; 73.04.

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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