Brent crude oil surged on Tuesday, breaking above the 45.40 key resistance barrier, which also acted as the upper bound of the sideways range that contained most of the price action since August 5th. The rally was stopped near the 46.00 barrier, and today, the price pulled back somewhat. However, bearing in mind that it continues to hover above the 45.40 zone, we would consider the short-term outlook to have turned positive.
Brent may continue to correct lower for a while more, but we see decent chances for the bulls to recharge near the 45.40 barrier. If so, the forthcoming positive leg may result in the violation of the 46.00 hurdle, something that could see scope for extensions towards the 46.90 zone, which is marked as a resistance by an intraday swing high formed on March 6th.
Shifting attention to our short-term oscillators, we see that the RSI topped near its 70 line, while the MACD, although above both its zero and trigger lines, has topped as well. Both indicators detect slowing upside speed and support the notion for some further declines before the bulls take control again.
In order to start examining whether the bears have stolen the bull’s swords, we would like to see a dip below the lower end of the aforementioned range, at 44.00. The first stop after that may be Friday’s low, at 43.50, the break of which may set the stage for the 42.90 zone, which is marked as a support by the low of August 4th.
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