Today, Brent crude oil price opened the trading session with a gap of 1$ per barrel and reached new lows. Last month the price fell by 1.5$ per barrel affected by the following events: the increase in oil supply from major oil producers, the eurozone crisis, Chinese and global stock markets fall, expectations of US interest rate hike, reallocation of investors assets into Japanese yen, US dollar and Swiss franc.
The oil supply is growing and the demand is at seasonal highs. In the second half of the year, the demand is expected to fall while the oversupply should increase if international sanctions are lifted from Iran.
On Monday at 12:00 p.m. (GMT +3) September futures for Brent crude oil on ICE Futures fell by 2.2% to 51.03$ per barrel; and in the medium term the pressure will increase.
The fall may be halted If US economic releases come worse than expected and Fed hints that it may cancel or postpone US interest rate hike.
Support and resistance
Since June 2014 the pair is trading in the downward channel. The correction, which started early in the year, finished in May. The price is moving down to year lows at 46.00$ per barrel.
OsMA and Stochastic on the 4-hour, daily and weekly charts give sell signals. Long positions are not relevant.
Support levels: 50.20, 48.10.
Resistance levels: 52.50, 55.00, 56.50.
Open short positions from the current price or at the pullback from 52.50, 53.50, 54.00 with targets at 50.20, 48.10, 47.00, 46.75 and stop-loss at 55.20.
Open alternative long positions only if the price breaks through 58.00 (EMS200 on the 4-hour chart). In this case targets should be 60.80, 62.80 (23,6% Fibonacci).