Brent Crude – Bearish Bias Remains as Losses Grow

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.

Brent daily

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.

Brent 4hr

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.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.