Brent Crude – Is the Rally About to Resume?

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.

Brent Daily

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.

OANDA MP – BoE and US Data Eyed (Video)

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.

Brent 1hr

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.

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 Currency Analyst at OANDA
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 Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. 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.