Brent Oil Stays in Uptrend Mode

Brent crude oil traded higher today, breaking above the high of April 29^th, at 68.90. The move confirmed a forthcoming higher high on the 4-hour chart, which combined with the fact that the liquid is trading above the upside line drawn from the low of April 7^th, paints a positive near-term picture.

In our view, we could see the bulls targeting the 70.30 zone zoon, a territory that provided strong resistance between March 11^th and 15^th. If they are strong enough to overcome it this time around, we may experience upside extensions towards the peak of March 8^th, at around 71.80.

Turning our gaze to the short-term oscillators, we see that the RSI hit the 70 line and ticked down, while the MACD remains above both its zero and trigger lines. Although both indicators detect strong upside momentum, the fact that the RSI turned down after hitting 70, make us careful that a setback may be looming before the next leg north, perhaps for oil to test once again the aforementioned upside line as a support.

In order to start examining the chances of a deeper downside correction, we would like to see a break below that line. Something like that may encourage the bears to target the 66.45 barrier, marked by yesterday’s low, the break of which may see scope for extensions towards the upside line, or the 64.70 area, which offered decent support on April 22^nd and 26^th.

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