It’s a bit of a slow day for commodities, but I’m waiting on a potential big move brewing on the 4-hour chart of Brent crude oil.
Is the trend still our friend or are we about to see the bend at the end?
Check out these levels!
Brent Crude Oil (UKOIL) 4-hour Chart by TV
Crude oil prices got a boost earlier on, thanks to supply constraints coming from Red Sea tensions and Russia’s plans to increase its output cuts.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on crude oil headlines, then it’s time to do some work by checking out the economic calendar and stay updated on daily fundamental news!
Reports that Angola is exiting the OPEC might also contribute to downside pressures on global oil supply levels, as the African nation said that the organization was no longer serving its interests.
However, thin liquidity and profit-taking towards the end of the year might spur a retreat from the latest rally, especially since the commodity price is already hitting upside barriers.
In particular, Brent crude oil (UKOIL) is testing the top of its descending channel visible on the 4-hour time frame.
Price has also formed higher highs while Stochastic already made lower highs, displaying a bearish divergence. To top it off, the 100 SMA is below the 200 SMA after all, confirming that bearish vibes are present.
Keep an eye out for a move to the next downside targets such as S1 ($76.25) near the mid-channel area of interest and S3 ($71.48) at the channel support in case price falls through the Pivot Point level ($78.40).
A continuation of the rally past R1 ($81.02) could signal that crude oil bulls are refusing to back down, which might mean that a reversal from the downtrend could follow. In that case, UK oil could set its sights on the upside targets at R2 ($83.18) or even R3 ($85.79).
Better watch out for these bullish moves if a Santa Claus rally shows up!
