On the daily timeframe, we can see that the market has today broken outside of the rising wedge that has dominated trade over recent months. Now trendlines are not the be all and end all, yet this could be significant.
Looking at the stochastic oscillator, while the bearish divergence is only slight, it is interesting that we are seeing a failure swing, with two failed attempts to break through the April high of 95.78. Price action is certainly slowing and the fact that momentum is failing to match the higher highs is a little worrying.
Finally, on an intraday (four-hour) chart, we can see the clear double-top formation that has occurred, with price currently retesting the neckline ($48.77) as resistance. The projected target for that double-top coincides perfectly with the mid-May swing low of $47.26. Crucially, a break through that level would have much more significant implications for the medium-term picture than this current move below $48.77.
For now, the question is whether we will see a break lower, which would subsequently look towards $47.26 as the next key area of support. Tomorrow’s OPEC meeting is largely a no go from an output freeze perspective and thus it is hard to see where anything price supportive will come from the wires. We have seen tentative signs that $50 could mark a top, if only temporarily. This by no means has been confirmed, yet with key event risk ahead and a double-top having been formed, it would come as no surprise if buyers turn into sellers in the current environment.
To the upside, the key test is whether we can see a break through the September 2015 high of $51.24. Until that occurs, the risk of a sharp sell-off seems to outweight the benefits of another gradual move higher.