Crude Oil Sell-Off Stalls After Recent Heavy Losses - Support Nears
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)
What’s your opinion on the Oil? Share your thoughts with us using the comments section at the end of the article or you can contact the author via email at Nicholas.email@example.com or via Twitter @nickcawley1
--- Written by Nick Cawley, Analyst
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.