Brent crude oil surged on Tuesday, breaking above the resistance (now turned into support) barrier of 78.25, and the upper bound of the downside channel that had been containing the price action since May. In our view, this signals the resumption of the prevailing major uptrend and keeps the door open for the liquid to continue drifting north.
After the rally, the price hit resistance slightly above the 79.50 level, marked by the peaks of the 29th of June and the 10th of July, and then it retreated back below it. If the bulls prove strong enough to clearly overcome that barrier, then we may see them driving the battle towards the 80.50 mark, defined by the high of the 22nd of May. Another move above 80.50 could set the stage for peak of the 21st of November 2014, at around 81.70.
Taking a look at our short-term oscillators, we see that the RSI rebounded and crossed above its 70 line, while the MACD, already positive, has turned up and crossed above its trigger line. These technical studies reveal upside momentum and support the case for some further advances.
On the downside, a clear move back below 77.20 may signal that the break above the upper bound of the aforementioned channel was just a false break out and could encourage the bears to drive Brent lower, within the channel. A move below 77.20 could initially aim for the 76.00 support, marked by the lows of the 28th and 29th of August, the break of which is possible to see scope for extensions towards the 75.00 hurdle.
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