Last week the price of Brent crude oil fell to its 7-year lows.
The fall was the result of the OPEC decision not to limit production quotas for countries in the cartel that increased worries on the market. Investors fear that excess of supply will worsen in the next year when exports from Iran can also hit the markets. According to the IEA report that came out last week, excess of supply is likely to remain in 2016.
At the same time, declining prices cause fall in shale oil production in the US.
Support and resistance
Bollinger Bands on the daily chart is moving down while the price range is widening. However, the indicator has formed a signal for correctional growth. MACD continues falling. Stochastic is in the oversold zone and trying to turn up.
The indicators recommend waiting for clearer trading signals.
Support levels: (11 December low), 36.50, 36.00.
Resistance levels: 38.00 (local high), 48.77, 39.44, 40.00 (psychologically important level), 40.46, 410.00 (9 December high), 42.08, 43.00, 43.43.
Long positions can be opened after the price rebound from the level of 37.32 (with the appropriate indicators signals) with the target at 40.00 and stop-loss at 36.50. Validity – 2-3 days.
Short positions can be opened after the breakdown of the level of 37.00 with the target at 35.00 and stop-loss at 37.80. Validity – 2-3 days.