Brent oil tumbled during the European morning Tuesday, after it hit resistance near the 75.65 barrier, with the slide bringing the price below the key support (now turned into resistance) territory of 74.65. Brent continues to trade below the lower bound of a prior channel that contained the price action from the beginning of April until the 25th of May, while today’s fall confirmed a forthcoming lower low on the 4-hour chart. So, having all these in mind, we believe that the short-term outlook is negative for now.
In our view, the dip below 74.65 may have opened the way for the 73.15 zone, the break of which may target our next key support of 72.35. Another dip below 72.35 has the potential to set the stage for more bearish extensions, perhaps towards the 70.75 hurdle, or the long-term uptrend line drawn from the low of the 21st of June 2017.
Looking at our short-term oscillators, we see that the RSI edged south and just touched its toe below its 30 line, while the MACD lies below both its zero and trigger lines, pointing down as well. Both these indicators support the notion that Brent could continue drifting lower in the near future.
On the upside, a move back above 75.65 could signal that the bears have abandoned the battlefield, at least temporarily, and is possible to initially aim for the 76.85 obstacle. A move above 76.85 could pave the way towards the 78.00 zone.
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