Brent crude oil is testing the limits of its downtrend!
Will this week’s headlines extend the downside action for the commodity?
I’m looking at the daily chart for clues:
Brent Crude Oil (UKOIL): Daily
Brent Crude Oil (UKOIL) Daily Chart
U.K. oil prices have been seeing lower highs and lower lows since hitting resistance at $125.00 in mid-June.
The ball is in the bears’ court today as UKOIL hits the top of a descending channel.
As you can see, the top of the channel lines up with the $105.00 July resistance zone.
And then there’s the 100 SMA resistance, which is not only near the $107.50 previous sell zone but is also closing its gap against the longer-term 200 SMA.The cherry on top of the (potentially) sweet setup is a bearish divergence on the daily time frame.
Will Brent crude extend its downtrend?
It will likely depend on supply speculations and overall market sentiment.
Recall that Saudi Arabia and its OPEC+ friends are floating the idea of production cuts to help “stabilize” the volatile oil markets.
If implemented, the move will likely cancel any additional supply that would come from a nuclear deal with Iran.
Meanwhile, global growth concerns and talks of the U.S. – the world’s largest economy – experiencing “some pain” in the foreseeable future are keeping investors from taking risky bets like crude oil.
Keep your eyes peeled for updates on global growth concerns as well as any oil-related headlines ahead of the OPEC+ meeting next week to see if UKOIL will turn lower and dip below July’s lows!
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.
