Brent rallies into key resistance
Brent has managed to rally into an interesting area of resistance, which has provided the spark for the market to weaken over two recent occasions.
With Brent having broken lower from a symmetrical triangle, coupled with the fact that we have a heavily overbought sideways market, with a clearly defined resistance zone, a turn lower seems likely from here. Should we post an hourly close above $47.30, then this could set us up for a bounce, yet given the proximity to this major resistance zone, another leg lower is preferred. That being said, the outlook for WTI provides us with a very different story.
Will WTI signal shift in emphasis?
WTI has broken through a key resistance level, the likes of which we are watching in Brent. This break above $44.86 provides a potential warning sign that the same could happen in the Brent market.
Given the rally from the crucial $43.22 support level and subsequent double-bottom formation, it looks likely that we are seeing a retracement of the $48.12-$43.08 pullback. As such, Fibonacci levels are worth watching for resistance. Given the two different stories in Brent and WTI, it makes sense to await either an hourly close below $44.86 in WTI or above $47.30 in Brent, as this would supply us with a consistent story across both of these correlated markets.