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Brent – Bullish Breakout May Bring $75 into Play

In Wednesday’s US pre-open report (US Open – Markets Rebound in Light Data Session) I highlighted that Brent is looking bullish despite the fact that it has been in consolidation for most of the month. Well things have just taken a bullish turn and I think we could be about to see a break higher.

Brent daily [1]

Brent bounced off the 55-day simple moving average and 50 fib level – 17 March lows to 6 May highs – yesterday, with the candle forming a hammer, albeit one with a larger body than I would like to see.

Today’s rally looks likely to complete a morning star formation, barring a sell-off into the end of the session, which given the level it has bounced off suggests further gains could lie ahead.

Moreover, the stochastic has broken the downtrend which is another signal that momentum has taken an upward turn.

Should we see a break above the consolidation, I would become quite bullish and based on the size of the move into the flag ($60.50 (22 April lows) – $69.22 (6 May highs)) we could see a move towards $75.

Here it could run into resistance with it roughly coinciding with a previous level of support and the 233-day SMA. Further resistance may be found along the way around $67.33, $71.25 and $72.80, which were key levels during the decline towards the end of last year.

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 [5]

Senior Market Analyst - UK & EMEA at OANDA [6]
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 BNN. 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

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