Brent oil has been in a sliding mode, after it hit resistance near 79.40 last Friday. In the short run, we see that the liquid has been oscillating between 72.50 and 80.45 since the 18th of April. However, in the bigger picture, the price continues to trade above the uptrend line drawn from the low of the 21st of June 2017, which keeps the long-term uptrend intact.
If the bulls are strong enough to take charge from current levels, or from near the 75.60 support, then we would expect them to aim for another test near 79.40. That said, we would like to wait for a clear close above 80.45 before we get confident on the continuation of the prevailing uptrend. Such a move would confirm a forthcoming higher high on the daily chart and could set the stage for the 85.00 territory, marked by the peak of the 10th of November 2014.
Taking a look at our daily momentum indicators, we see that the RSI, although above 50, has turned down and looks ready to fall back below its equilibrium line soon. The MACD lies above both its zero and trigger lines but shows signs of topping as well. These indicators suggest that further setback may be on the cards for now.
A dip below 75.60 could confirm the case for further retreat and could pave the way towards the aforementioned uptrend line, or the 72.50 support. That said, even if this is the case, we would still consider the long-term picture to be somewhat positive as, in our view, there is a decent chance for the bulls to jump in from near the trendline.
We would like to see a clear dip below 72.50 before we start examining the case of a reversal. Such a dip would bring the rate below the uptrend line and could signal the completion of a double top formation. The bears could initially aim for the 70.30 support zone, the break of which could carry more bearish extensions, perhaps towards the 66.70 hurdle, a support defined by the lows of the 4th and 6th of April.
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