After an unsuccessful attempt to exit the sideways range between 57.65 and 61.50 on September 5th, Brent Crude oil surged again on Friday, and yesterday it managed, not only to exit the aforementioned range, but to also break the downside resistance line drawn from the high of April 25th. So, having these technical signs in mind, we would consider the short-term outlook to have turned positive for now.
If the bulls are willing to stay behind the steering wheel, we could soon see them aiming for the 63.90 barrier, the break of which may set the stage for the 65.43 zone, defined as a resistance by the high of July 31st. They may decide to hit the brakes after hitting that zone, and perhaps allow a small pullback. However, they could regain control from near 63.90 and then drive the battle up again, for another test near 65.43. A break above that zone may extend the advance towards the high of July 16th, near 66.71.
Shifting attention to our short-term oscillators, we see that the RSI stands flat near its 70 line, while the MACD lies above both its zero and trigger lines. Both indicators detect upside momentum, but the flat RSI suggests that it is better to wait for a break above 63.90 before we get confident on larger upside extensions.
On the downside, we would like to see a drop back below 61.50 before we abandon the bullish case. Such a move would bring the rate back below the aforementioned downside resistance line drawn from the high of April 25th, as well as back within the short-term range between that hurdle and the 57.65 barrier. We could then see declines towards the low of September 6th, at 59.65, the break of which could open the path towards the lower end of the range, at 57.65.
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