Brent Crude – Triangle Top at Breaking Point

Having spent much of the day paring yesterday’s gains, Brent crude has taken off again this afternoon and finds itself back at the top end of the range it’s traded in this year.

The result of the consolidation this year has been an ascending triangle forming which is quite a bullish set up, regardless of whether it’s found in an uptrend or downtrend. A breakout in this set up quite often comes around the two thirds point which is where price action is currently approaching.

That doesn’t mean that we will see a break out right away, or that it will definitely come to the upside, but the chart is starting to look a little bullish. For example, the most recent rally, which started at the beginning of April is showing no signs of exhaustion on either the stochastic or MACD.

We also broke above the 100-day SMA earlier this week for the first time since July last year which suggests a bullish shift in sentiment. Of course, this in itself doesn’t mean it’ll break higher now, but it does add support to the bullish set up that we now see.

Brent Daily

The correction today has left us with a pretty interesting set up. If the pair breaks through the year highs and out of the consolidation period, it could open up a much larger move to the upside.

One of the good things about these setups is that they give a possible price projection. It is believed that if you take the size of the opening of the triangle – $17 – an project it above the top of the formation, it gives you a possible price projection. This would be around $79.25 which lies between two possible resistance levels.

If this level holds once again, today’s low will be a very interesting level and it would effectively act as the neckline of a double top, if it is completed. For it to be completed, the neckline would need to be broken.

Again, the good thing about these set ups is that that provide possible price projections to the downside. It is believed with double tops that if you take the size of the formation and project it lower, it gives you a possible downside target. Again, these brings price back to 59.38 which coincides nicely with previous resistance.

Brent 4hr

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

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

Latest posts by Craig Erlam (see all)