Brent crude has been cruising higher over the last couple of sessions, taking out some significant resistance levels with relative ease along the way and now finds itself trading at a one-month high.
The tests have been coming thick and fast for Brent in recent days and the next one isn’t far behind. The break through $ 46.50-46.70 was very significant – taking out prior support and resistance, retracement levels and moving average – but the next test could be more significant again.The next big test will come around $ 48-48.20. Not only has this been an important level of support and resistance over the last four months, it’s also the 61.8% retracement of the move from the June highs to this month’s lows.
A break above here would send quite a bullish signal, with the next test beyond here coming around $ 50-51, again another major level of resistance in recent months.While the 4-hour chart would suggest momentum remains with the bulls, a closer look at the 1-hour chart suggests otherwise.While we’re not seeing momentum being drained from the move as you can sometimes see, there is a small divergence forming as we approach this key level of resistance.
This divergence isn’t significant enough to fill me with much confidence though and I still want to see a clear reversal pattern on the chart before taking a more bearish stance on this.
About Craig Erlam
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 research. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. 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.