Current trend

Yesterday the price of Brent crude oil significantly fell.

At the same time, Saudi oil company Aramco sharply lowered its official January oil prices. While today Iran Oil Minister stated that countries outside the OPEC are not going to reduce their oil output. However, because countries in the cartel are not planning to reduce their production either, excess of supply on the world market will be increasing. Furthermore, the US Fed can start increasing its interest rates this month that would strengthen the Dollar and in turn pressure oil prices.

Today attention needs to be paid to the ECB Press conference and its Interest Rate Decision, Fed’s Yellen testifies, FOMC Member Mester speech, and Markit and ISM PMI’s in the US.

Support and resistance

After the price rebounded from the level of 42.50 (year lows) it remains in an upward correction that could last up to the levels of 44.00 (the middle of a descending channel on the 4-hour chart), 44.50 (ЕМА50), 45.50 (ЕМА144, upper border of the channel). A breakout of the level of 47.00 (ЕМА50 on the daily chart) can resume an upward trend.

However, more likely seems a breakdown of the level of 42.50 and a fall towards 40.00 (psychologically important level).

On the daily and weekly charts, OsMA and Stochastic recommend short positions, while on the 4-hour charts they are turning to purchases.

Support levels: 42.50, 42.00.

Resistance levels: 44.00, 44.50, 45.00, 45.25, 45.50, 46.00.

Trading tips

Long positions can be opened above the level of 44.00 with targets at 44.80, 45.50 and stop-loss at 43.60.

Short positions can be opened after the breakdown of the level of 42.50 with the target at 42.00 and stop-loss at 42.80.

Brent: output grows

Brent: output grows




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