Brent crude oil has been trading in a consolidative manner since Tuesday when it jumped higher after hitting support t 78.60. That said, it stayed below the downside resistance line taken from the high of Oct. 26 and above the 81.80 barrier. In our view, despite Tuesday’s rally, the outlook remains somewhat negative, but to start examining a forthcoming negative wave, we would like to see a dip below 81.80.
Such a dip could initially encourage the bears to push the action down to the 80.15 barrier, marked by Monday’s inside swing high. However, if they are unwilling to stop there, then a break lower could extend the fall towards the low of Tuesday, at 78.60, or the 78.15 territory, which stopped Brent from moving lower on Friday and Monday.
Shifting attention to our short-term oscillators, we see that the RSI lies above 50, but it points east, while the MACD, although positive and slightly above its trigger line, is flat as well. Both point to positive momentum but a weakening one. They could top soon. That’s why we believe that the bears may take advantage of that, but as we already noted, we prefer to wait for a confirmation break below 81.80.
Now, to start examining whether the bulls have taken the driver’s seat, we would like to see a break above 83.40, marked by the high of Nov. 16. The price will already be above the aforementioned downside line, and we could see advances towards the peak of Nov. 4, at 85.10. If the bulls are unwilling to stop there, then a higher break could pave the way towards the 85.95 zone, which prevented further advances on Nov. 2 and 10.