2016-09-29 12:38:34

Review and dynamics
Preliminary agreement to reduce production of oil by 200 000 – 700 000 barrels per day adopted at yesterday’s OPEC meeting caused sharp increase in oil prices. Oil price of crude oil Brent has soared by 5%. Yesterday spot price of Brent was at the level of 48.90.

With the opening of today's trading session, oil prices are falling. Measures adopted by OPEC may not be sufficient to stop the excess of oil supply.

Traders place take profit orders on yesterday's long positions.

At the beginning of today's European session spot price of crude oil Brent is at the level of 48.00.

Our opinion
As there are no other drivers for the rise in oil prices, downtrend can resume. The price of crude oil Brent can also quickly return to support level of 46.20 (Fibonacci 50.0% after the decline from $65.30 to the lows of 2016 at the level of 27.05 and the moving average lines ЕМА200, ЕМА144 on the daily chart). The lower line of the ascending channel on the weekly chart is crossing the level of 46.20.

On the hourly chart the indicators OsMA and Stochastic give signals to sell; on 4-hour chart the indicators also give signals for short positions. If the price breaks out support level of 47.10 (ЕМА200, ЕМА144 on 4-hour chart and ЕМА50 on the daily chart) the price can continue to decline below the key level of 46.20.

As long as the price is above the important support level of 46.20, uptrend will continue. Breakout of this level may trigger further decline in oil prices. In this case, the nearest targets will be at the levels of 43.65 and 41.70 (Fibonacci 38.2% and the lows of July/August).

As an alternative scenario the price can grow to the annual highs at the levels of 50.70 and 52.80.

However, the meeting in Algeria has finished, and judging by today's decline in oil prices, investors do not expect the rise in oil prices. On the weekly and monthly charts the indicators OsMA and Stochastic give signals for short positions.

Support levels: 47.10, 46.20, 45.00, 43.65, 41.70 and 41.00.
Resistance levels: 48.80, 50.00, 50.70 and 51.00.

Trading tips
Sell on the market. Stop-Loss: 48.80. Take-Profit: 47.10, 46.85, 46.20, 45.00, 43.65 and 41.70.
Buy Stop: 48.80. Stop-Loss: 48.10. Take-Profit: 50.00, 50.70 and 51.00.

Take profit caused the decline
Take profit caused the decline

To the first support level of 47.10
To the first support level of 47.10