Brent crude oil remains in a narrow range; lacks direction. Since last week, the technical picture has not changed. Turning to fundamental news overnight talks between Iran and major powers ended on an optimistic note.
At ‘Monday’s close, the Brent crude oil was higher 70cents to close at 63.70$ withholding above the crucial support level located at 62.40$. This morning in Asia, it is up by 0.3% on the anticipation of US Fed interest rate cut and optimism over US-China trade talks.
US and China are still locked in a trade war, another round of talks resume Tuesday.
NPR reported that “I don’t know if they’re going to make a deal,” President Trump told reporters last week. “Maybe they will. Maybe they won’t. I don’t care, because we’re taking in tens of billions of dollars’ worth of tariffs.”
The year-old trade war may escalate further if both parties fail to seal a deal. In this case, Brent oil price might fell to 61$ levels. The current sentiment is optimistic, and the oil price could rally further towards 64.50$ based on the given fact.
A decisive breakout and close above 64.60$ could generate a new leg higher to 65.00$ and 65.30$ initially, followed by 65.90$.
However, the price is expecting the retrace to test 58.00$ level in the medium term, which is the equality of its 200MA (Weekly) and 50MA (Monthly).
As we continue to forecast Brent to head lower to 58.00$ in the coming weeks, so we will look for another opportunity to return to short Brent.
If Brent crude oil rallies on a positive US-China talks this week, it could make sense to open fresh tactical shorts.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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