• Rejected at 78.6%
  • Range expected between 55-50$.
  • Pattern divergence spotted between BRENT and WTI

Brent oil re-tested the earlier resistance zone/38.2% (below chart)and rebounded on Monday session. Impact of Hurricane Irma and Harvey are likely to support the oil prices in the near term.

Pattern divergence: The price pattern has given an upside breakout through the five and eight months descending trend line. But rejected at 78.6% (Jan-June fall). If we turn to WTI daily chart, the breakouts are not available. The price has rejected at 200DMA

The spread between WTI and Brent climbed to 5.85$ vs 4.93$ last week. This week, investors focus on Monthly reports from the IEA and OPEC.

S&P Platts reported, “Distribution analysis shows that Brent’s monthly fluctuation rate is trading within one of the lowest volatility intervals in the last two years, indicating that a mean reverting movement will likely happen in the coming weeks. Analyst Vito Turitto reports”.

Resistance seems at 54.40, 55 and 55.90/56. Additional resistance seems at 56.50 (earlier swing high)

 

Alternatively, a move below 52.80 needed to re-test the earlier support base 52.20-52. The selling pressure accelerates below 52, could open to 51.10/51, 50.50 and 50.

View: Focus on WTI H4 chart to forecast further extension. We’ll be keeping an eye.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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