Brent crude oil futures (NYMEX: BZ) recouped some of its prior selloff on Wednesday, pushing back above the $82.50/barrel (BLL) level on the back of geopolitical tensions in the Middle East that continue to impose a risk premium on oil prices. Traders are also awaiting OPEC’s March decision on whether output cuts will be extended into the second quarter, bolstering supply concerns that continue to underpin the price.
However, demand worries have slightly outweighed these supply tailwinds. The sentiment in the market that the Federal Reserve will keep interest rates higher for longer has weighed on the futures, as the US dollar has held firm. However, this could all change with the release of the FOMC meeting minutes later today, where the market could get further cues on the Federal Reserve’s monetary stance and the potential timeline for rate cuts.
Technical
On the 4H chart, an ascending triangle is in play, with the price action teasing a breakdown at $82.51/BLL. The 50-SMA (blue line) could challenge the bears in sustainably moving lower, but if the sellers can break down this support, it could trigger a triangle breakdown for a bearish trend reversal.
The breakdown’s first level of support is $81.98/BLL. At this level, a pivot could occur to initiate a retracement, but any movement beyond this support could result in a prolonged downturn toward $81.45/BLL. The 100-SMA (orange line) could then come under the spotlight, currently at $81.11/BLL, to potentially initiate a retracement.
However, if the price fails to close below the 50-SMA, the price could remain within the triangle pattern. Resistance at $83.12/BLL is then the final barrier to cross before retesting the psychological resistance at $83.61/BLL. Here, a pullback could occur for a continuation of the triangle pattern, or a bullish break could be triggered to steepen the uptrend toward $84.14/BLL.
Summary
The Brent crude oil futures have recouped some of their losses from the prior day but are teasing a breakdown of the ascending triangle pattern. Support at $81.98/BLL could be a level to watch to determine whether a retracement could occur or whether the futures are on track for a prolonged trend reversal.
Sources: Koyfin, Tradingview
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
