Brent crude has been in consolidation mode over the last week or so but may be about to make another push to the upside, continuing the trend that began about a month ago.
It also appears to have got confirmation of the break above the 100-day simple moving average in recent days, having initially broken above here on 7 March.
The catalyst for the latest move appears to have been renewed weakness in the dollar which came as the Fed revised its rate hike forecast for this year from four to two, more in line with market expectations.
With the flag resistance having now been broken, Brent could now push on with resistance possible coming around $42-42.50. This was a key zone of support between August and December last year and could offer significant resistance again.
Above here, $46.46.50 could be key having also been an important support in September and October.
That said, the first two hurdles for the pair are yet to be cleared. The most obvious of these is $41.09, today’s high, with it having pulled back since then. To cast doubt on its ability to overcome this, a bearish divergence appeared between price and the MACD histogram on the last high.
The first hurdle though is around $40.65, the high from around midnight. If we fail to break above here, it may suggest a head and shoulders is forming with the neckline around $40.10. A break of the neckline would complete the head and shoulders.
It’s worth noting that Brent is rallying at the time of writing and we could see it break above here very shortly.