Brent oil Technical Analysis: This MA line is capping the recovery rally ahead of OPEC meeting

Brent's recovery rally from the Nov. 29 low of $57.33 is struggling to move past the resistance of the 4-hour chart 100-SMA, possibly due to caution ahead of the meeting between OPEC and other major oil producers to discuss supply cuts.

Oil prices have dropped 30 percent from the four-year highs seen in October. That sharp sell-off has prompted OPEC to consider cutting production levels. Oman Oil Minister Mohammed Al Rumhi told reporters that participants in a Wednesday technical meeting, including Russia, “recommended there is a need for reductions.”

As a result, the meeting between the major producers, scheduled today, is likely to produce some type of agreement on decreasing output.

4-hour chart

As seen above, oil is trapped between the 50-candle MA and 100-candle MA. Notably, oil has failed twice in the last two days to penetrate the 100-candle MA hurdle, now located at $62.84. A convincing break above that level would signal a continuation of the recovery rally.

Daily chart

The bullish divergence of the relative strength index (RSI) on the daily chart indicates the sell-off from 4-year highs likely ended at $57.33. Further, the 5- and 10-day MAs have produced a bullish crossover. So, oil is more likely to find acceptance above the 4-hour chart 100-candle MA of $62.84. The prospects of a bull breakout above that level would drop if prices fall back below $60.00.

At press time, Brent is changing hands at $61.48 per barrel.

Trend: Neutral-to-bullish