Brent Crude – Are We Due a Correction?

By Unknown

Kamis, 18 Agustus 2016

Brent Crude – Are We Due a Correction?

Last week, I wrote a piece when Brent was testing the low of July and threatening to break below simple 89-day? moving average (Brent Crude - Key Support Input under pressure). Since then, the level has broken and we now find ourselves trading around this next major support level.

How Brent behaves here could provide a strong idea of ​​how the oil will play in the coming weeks as a break below SMA 0 and 240 and previous level of a major support and resistance would be a very bearish movement. This could trigger another significant move lower.

Given that we are now on our sixth consecutive losing day, I wonder if the bears still have it in them to force such a significant break on this occasion. Should we see, it would send another strong message

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Stochastic and MACD histogram on the 4 hour chart below, the two suggest that the movement is losing momentum during the most recent lows. Should we see some profit taking at this level, it could trigger a correction in Brent, that would bring two levels into consideration.

First, if we look at a shallow correction is approximately 44.75 to $ 45, a recent level of support and resistance and 38.2 % movement from 12 July high current low (assuming, of course, we have reached a bottom - it could be adjusted if new lows are made)

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The second, and perhaps more likely, is about $ 45.50 to 45.75, a major support last week and the retracement 50% of the above movement. Should we see a reversal of one of these levels, it could be followed by another attempt to break below the 0 and 240 SMA.

A break of these now, or after a correction could see Brent head back to another important area of ​​support and resistance around 35.65 to $ 36.75 in the next month. The next important level of support that may appear around $ 40-41.

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