Last week the price of Brent crude oil was trading along a sideways channel.
Oil is pressured by growing output in the OPEC countries and in Iraq, while main oil consumers reduce their imports, and strengthening US Dollar that since the middle of October grew against the basket of major currencies by 4%. Furthermore, the number of functioning oil pumps in the US keeps falling though production volumes remain stable.
However, despite oversupplied markets and other negative factors, oil prices remain at very low levels. Therefore, in the nearest future the price is likely to grow.
Support and resistance
The price has left a narrow descending channel and entered a sloping ascending channel in which it is likely to remain for the next few weeks.
A breakdown of the key support level at 42.20 (August lows) is unlikely until the end of the year, while a price strengthening seems more feasible. It is recommended to trade between the channel borders.
MACD’s histogram is in the negative zone and its volumes are growing that indicates a likeliness of the growth.
Support levels: 43.65, 43.20, 42.85, 42.20, 41.70, 41.00.
Resistance levels: 45.00, 45.50, 45.75, 46.50, 58.40, 48.85, 50.00.
Long positions can be opened from current levels with targets at 45.75, 48.40 and stop-loss at 42.05.