Crude Oil Sell-Off Stalls After Recent Heavy Losses - Support Nears
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Crude Oil Price Analysis
- Brent crude looks oversold in the short-term but support needs to hold to prevent further losses.
- RSI indicator and 200-day moving average may underpin oil.
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Oil Looks Weak but Support May be on Hand
Brent crude has had a tough couple of months after hitting a three-and-a-half year high in late May. A combination of a strong US dollar and fears over a slowdown in China have weighed heavily, while recent talk of production increases led the last, sharp, leg lower. From a technical perspective the two ‘double tops’ around $80.40/bbl. in May and $79.50/bbl. in late June may cap any further upside in the medium-term, while the spot price still trades below the 20- and 50-day moving averages.
On the positive side, Brent still trades above its 200-day moving average while the RSI indicator is at a five-month low and nears oversold territory.
The January 25 swing high at $70.85/bbl. should provide the first level of support with the 200-day moving average, currently at $70.06/bbl. reinforcing this level. A break and close below these levels would leave oil vulnerable to another move lower towards the 38.2% Fibonacci retracement level at $66.75/bbl.
On the upside, $72.00/bbl. needs to be cleared to open the way for a renewed push higher.
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Brent Oil Daily Price Chart (September 2017 – July 18, 2018)
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--- Written by Nick Cawley, Analyst
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.