Brocker.Org: Brent oil – Is the glass half full or half empty?

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Brent oil is trading flat around $52.00/barrel this Friday morning in Asia following a sharp rebound from the 200-DMA level in the overnight trade.

Are we witnessing a repeat of technical pattern?

Over the last eight months, dips below 200-DMA proved to be short lived and were followed by a fresh uptrend as the RSI was oversold/close to being oversold. Such a move was first seen in early Aug 2016 and was repeated November 2016 and March 2017.

Glass half full

The sell-off in Brent from the recent high of $56.62 came to halt at the 200-DMA line earlier this week. Prices dipped below the 200-DMA yesterday, only to recovery sharply by NY closing. So will the rebound from the 200-DMA result in fresh rally as seen in Aug 2016, Nov 2016 and March 2017?

Glass half empty

What is different this time is the fact that the daily RSI is nowhere close to being oversold (below 30.00). The RSI currently stands at 40.00. Hence, it will be interesting to see if the rebound from 200-DMA continues or fizzles out.

Oil traders would closely watch the Baker Hughes weekly US oil rig count report due for release in the late NY session today.

Brent Oil Technical Levels

A break above $52.13 (previous day’s high) would open doors for $52.60 (resistance offered by Jan 2016 low and Nov 2016 low) and $53.00 (zero levels). On the other hand, a breakdown of support at $51.37 (200-DMA) would expose support at $50.88 (Mar 13 low) and $50.44 (Apr 27 low).

 

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