Brent has rallied into yet another 76.4% retracement yesterday following a big US crude inventories drawdown. We remain within a potential topping pattern here, with lower highs being created. This holds unless we see an hourly close above $51.73, which would provide a more bullish outlook.
As such, it is worth looking out for intraday bearish reversal signals for as long as we remain below $51.73. The falling MACD histogram highlights the fact momentum appears to be on the wane, which could lead to another move lower, with $50.00 and $49.27 the next key support levels.
US crude has also seen a deep retracement, set within what looks like a clear downtrend over the past month. Price is currently only marginally above the 76.4% retracement, which provides a 3/1 risk-to-reward for a move back down to $46.00 rather than through $50.56.
We could be seeing a consolidation before another leg higher, yet we could be seeing a reversal lower. Thus watch out for shorter intraday charts to provide clues of the impending price action.