Another bad day for commodities at the start of the week is weighing heavily on Brent crude, which is down more than 2% on the day and looks set to make further losses in the coming sessions.
Barring a strong resurgence, Brent is on course to extend its losing streak to four sessions and with potential support around $53.70 now broken and momentum showing few signs of easing up, further downside is looking likely.
The next notable support for Brent comes around $51.50-$52, a recent area of support and resistance. This is coincides with the bottom of the channel that is has traded within for much of the last few months and could therefore offer some reprieve.
It will be interesting to see how Brent responds to these levels as they will provide strong insight into just how bearish the market is. If momentum begins to be lost as we approach the support, creating divergences between price action and the stochastic and MACD, it may suggest a correction will follow.
A break of this support would suggest the market is very bearish, especially following what has already been a very strong decline. Further support could be found below here around $49.50-$50.
It’s worth noting that we are seeing a slight divergence on the 4-hour chart which may point to short-term reprieve in the sell-off but we’re seeing nothing at this moment to suggest it would be any more than that.
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