Since the Brent price traced out a double top at 80.45 with the lower high pattern, the bearish magnitudes made good progress. The price plunged for the second straight session, continuing the last week’s weakness. From May 22 high, the prices have fallen nearly 7% and posted the most significant decline after early March.
The price has been spent enough time below 20MA, whereas the parallel support and the ascending support trendline holding the price reasonably well. A break below 74.50 could open further retracement to 74.00$, and 73.00$ levels. We remain to our last week’s forecast “There is a scope to retrace further to 38.2% fib reaction which coincides with the 50MA.”
On the flip side, we are still watching closely between 80.00$-83.00$ levels. Above these, the critical level to focus on the 61.8% fib reaction 89.60$.
Despite the short retracement the money managers and hedge funds raised the bullish bets in the last week as well. Moving to rig count, “Drillers added two oil rigs in the week to June 1, bringing the total count to 861, the highest level since March 2015” Reuters reported.
Traders are focusing on forthcoming OPEC meeting in Vienna, on 22nd June. “Amid speculation that it may have to increase output to make up for any Iranian barrels shut-in due to the US’ decision to reimpose sanctions”, reported by Platts.
Q2: Range: 83.00$-70.00$
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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