After a choppy trading last week, Brent decided to close Friday with a positive candle, this way ending the week in the green. That said, the commodity is still below the short-term downside resistance line, taken from the peak of the 21st of May. But on a bigger picture, Brent oil is above its long-term upwards moving trendline, drawn from the low of the 21st of June last year, which is a bullish sign for the long-term outlook.
OUTLOOK (SCENARIO A / B)
Brent is at a tricky spot, where on one hand, it could break through the aforementioned resistance line, but on the other hand, until the commodity actually breaks that line and closes above it, it could still make its way lower.
For now, considering a short-term scenario, we will stick to the downside and aim for the lows. A reversal back down from the resistance line could lead to a test of the last week’s lows at around 72.20. A break below that level could open the path for a test near the previously mentioned upwards moving trendline, where the price might stall for a while as the bulls and the bears could start battling for the faith of Brent oil. If the long-term trendline is not able to withhold the price from dropping further and the bears take the driver’s seat again, then this move could open the door for a test at the 70.35 level, marked by the highest point in March, or even a further slide down could be possible.
Alternatively, a break above the aforementioned downside resistance line could interest some more bulls to join the action and drive Brent towards the recent highs. Something like that could lead to a test of the 76.70 mark. After that, if the “black gold” continues to move higher, we could see a touch of the 79.10 area, a break of which may open the path towards the 80.50 zone.
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