Brent oil traded higher on Wednesday, after hitting support at 41.65 on Tuesday. However, the recovery was stopped near 43.56, slightly below the 44.00 zone, above which the liquid has been struggling to break since it tested it on June 23rd. Although Brent is trading above an upside support line drawn from the low of June 12th, as well as above all three of our moving averages on the 4-hour chart, we prefer to wait for a break above 44.00 before getting confident on a trend continuation.
A clear and decisive break above 44.00 would confirm a forthcoming higher high on both the 4-hour and daily charts and may initially set the stage for advances towards the 45.45 zone, marked by the low of March 6th. If the bulls are not willing to stop there, then a break higher could open the path towards the 47.00 zone, marked by an intraday swing high formed on the same day.
Shifting attention to our short-term oscillators, we see that the RSI lies above 50, while the MACD stands above both its zero and trigger lines. Both indicators detect positive momentum, but if we take a closer look, we see that the RSI has just ticked down, something which enhances our choice to wait for a move above 44.00 before trusting larger advances.
On the downside, we will start examining whether the bears wave stolen the bulls’ swords only if we see a dip below 41.65. The price would already be below the aforementioned upside support line and may drift lower, towards the psychological zone of 40.00, which provided decent support between June 24th and 29th. Having said that, in order to get confident on even further declines, we would wait for a dip below 39.10, marked by the inside swing high of June 12th. This could see scope for extensions towards the 37.00 territory, marked as a support by the low of the next day.
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