Brent drops back below key support level
Brent crude sold off sharply yesterday following on from a break below the key $56.45 level on an intraday basis. With the move below $55.42 yesterday, this brings a more bearish outlook to proceedings.
However, it is worth bearing in mind that we could see a significant retracement higher and fresh shorts do not make sense from here. Given that we remain above the $53 mark, the long-term (weekly chart) inverse head and shoulders remains in place.
Thus it makes sense to either await a rally into the $56.90 region for shorts, or else look for longs around the $54.50 region.
WTI sell-off takes a breather
WTI has also been weakening this week, with price falling below the key $52.60 mark. That means the current gains look like a retracement before we sell-off once more. Thus, look out for shorts in the event of a rally into the $54.10 region.
Like Brent, we are approaching the long-term inverse head and shoulders neckline, which at $51.24, would need to be broken for a more bullish long-term view to come into play.