Brent crude has been grinding lower since coming off its highs at the start of June and most recently has found itself consolidating between the 55 and 89-day simple moving averages.
Over the last couple of days, there has once again been some downward pressure on oil which now looks set to test the 89-day SMA support – around $46 – that held at the first time of asking earlier this month.
Should we see a break of this level, it could spark another move lower with the next key area of support coming around $42.20-43.30, where the 200 and 240-day SMAs intersect a prior zone of support and resistance.
This would also coincide with the channel support that Brent appears to have been trading within over the last seven weeks and would therefore not yet indicate a more severe move lower.
That said, should we see a break below here, then price would now be trading below all of these moving averages and potentially have broken below its established range which would indicate that any bullish correction may have run its course and we could be heading much lower.
As I write, Brent is testing its July lows having broken lower in the last hour or two, a break of which could prompt a break of the 89-day SMA mentioned above.