Commodities

Technical Analysis – Brent crude oil futures erase some gains in the near-term after they touch 3-year high of 77.94

Posted on May 10, 2018 at 12:24 pm GMT

Melina Deltas, XM Investment Research Desk

Brent crude oil has retreated over the last few hours after a sharp bullish rally in the past five days. On Thursday, the price posted a fresh more than three-year high of 77.94 and currently is paring some of its gains. However, the short-term technical indicators are bearish and point to more weakness in the market.

Looking at the 4-hour chart, oil prices are still developing above the 20- and 40-simple moving averages (SMAs) and are still pointing up. Meanwhile, the RSI indicator bounced off the overbought level and is losing ground, while the %K line of the stochastic oscillator posted a bearish cross in the overbought levels with the %D line, suggesting bearish retracement.

Upside moves are likely to find resistance at the more than three-year high of 77.94. Rising above this area would help shift the focus to the upside again towards the next immediate handle of 78.00. Breaking this level could see a test of the next psychological levels of 79.00 and 80.00.

In the short-term, the bearish phase remains in play especially if prices continue to trade below the high of the day. The next stop would come at 76.30, which coincides with the 20-SMA. Breaking this level, the price could move towards the 23.6% Fibonacci level of 75.33 of the upleg from 66.85 to 77.94. A successful close below this region could open the way for a touch of 38.2% Fibonacci mark of 73.71.

In the bigger picture, the market is bullish since April 6 following the rebound on 66.85.

brent commodities

Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. XM accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The research and analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it.

It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests and to disregard any conflicts of interest in providing our services.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all of your invested capital, so please make sure that you fully understand the risks involved.