Brent crude’s strong rally into the end of last week continued on Monday, climbing to $59.39 before running into the same barrier that has twice halted its attempt over the last few weeks.
It is still difficult to determine what kind of consolidation pattern this is, a continuation or reversal. The higher lows certainly suggest the downside move has lost all momentum, but that doesn’t in itself mean a reversal is on the cards as we often see with flag, ascending wedge and pennant formations.
It does for now appear to have failed at $59.39 though, with the following 4-hour candle failing to make a new high and ending as a hanging man. This is technically a bearish candle but in my view is far from convincing due to the rally into the close.
For a bearish bias to resume, I need to see price action make lower highs on the 4-hour chart. This is not a guarantee that a ceiling has been hit but it does suggest that the bears are wrestling for control and potentially getting the upper hand.
A move back to the ascending trend line could follow, between 54.70 and 55.00, as the period of consolidation continues.
Should we see a break above today’s highs which would see it again trading at a more than one month high, 62.00 – 62.30 would strike me as the next clear resistance. The break of the 100-day simple moving average, the first time it’s traded above here since July last year, is a red flag for me which suggests further upside could be on the cards.
This break of the day’s high would indicate a more bullish bias in the markets, potentially prompting a move into the 62.00 – 62.30 highs. An early signal of this move could come from the break above the triangle on the 1-hour chart, which is nearing a breakout. Although it should be noted that a break below could still result in an equally bullish flag or descending wedge, thereby only delaying the bullish move.
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.