Crude Oil Price Faces a Critical Resistance Level - Brent Oil Forecast
Crude Oil Technical Outlook
- Bears ease up yet, still in charge
- Will crude oil resume bearish price action?
On April 9, Crude oil surged to its highest level in four weeks at $36.90. However, the price could not maintain those gains and pointed lower after. On April 17, the weekly candlestick closed in the red with a 6.7% loss.
This week, the Relative Strength Index (RSI) fell from 42 to 30 emphasizing the bearish outlook of the market.
Brent Oil DAILY PRICE CHART (Sep 15, 2018 – Apr 24, 2020) Zoomed Out
Brent Oil DAILY PRICE CHART (April 10 – April 24, 2020) Zoomed IN
Looking at the daily chart, I noticed that on Wednesday Crude oil bounced from two-decade low at $18.99 then U turned as selling pressure eased. A present the market eyes as a test of the downtrend line originated from the March 3 high at $53.84. Any violation of this line would be considered a bullish signal. Additionally, the price is still moving in the current trading zone $20.00- $27.41.
A close above the high end of the zone could push Brent towards $39.81. If there is another close above that level, positive momentum may extend the rally towards $44.53. Having said that, the daily and weekly resistance areas and levels underlined on the chart should be considered.
On the flip side, any failure in closing above the high end of the zone might reverse the market’s direction towards the low end of the zone. Further close below that level could send Brent even lower towards $15.00. Nevertheless, the psychological support area marked on the chart should be monitored.
Brent Oil Four-Hour PRICE CHART (April 15 – April 24, 2020)
From the four- hour chart, I noticed that yesterday the price started a bullish momentum creating highs with higher highs with lows and higher lows. However, the move has paused today and developed a bullish flag pattern. Any violation of the upper line of this pattern would be considered a bullish signal.
A break above $27.96 would be considered another bullish signal. This might encourage bulls to rally the price towards $30.24. Although, the daily resistance level underscored on the chart should be kept in focus. In turn, any break in the other direction i.e. below $18.50 would resume bearish price action and possibly send Oil price towards $16.50. In that scenario, the psychological support level printed on the chart should be watched closely.
See the chart to find out more about key levels that would encounter in a further bullish scenario.
Written By: Mahmoud Alkudsi, Market Analyst
Please feel free to contact me on Twitter: @Malkudsi
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