Brent crude oil fell sharply yesterday, breaking below the key support (turned into resistance) barrier of 66.00. The bears remained in the driver’s seat today as well, pushing the liquid below the 64.00 hurdle, a support marked by the low of March 8th. On May 23rd, the price fell below the 69.10 area, confirming the completion of a failure swing top formation, while yesterday’s slide below 66.00 has confirmed a forthcoming lower low on the daily chart. Having all this in mind, we would consider the near-term outlook to be negative for now.
We believe that the break below 64.00 could have opened the way towards the 60.80 zone, which provided good support between January 30th and February 11th. The bears could take a break after hitting that possible objective, but if they decide to recharge thereafter and push the battle lower, we may see them targeting our next support area, at 59.30, which is near the lows of January 14th, 15th and 28th.
Shifting attention to our daily oscillators, we see that the RSI slid and just touched its toe below 30, while the MACD lies below both its zero and trigger lines, pointing south as well. These indicators detect accelerating downside speed and support the notion for Brent to continue drifting lower for a while more.
In order to abandon the bearish case, we would like to see a clear recovery back above 69.10. This could encourage some bulls to push towards the highs of May 16th and 20th, at around 72.80. If that zone fails to stop the recovery and breaks, then we could see extensions towards the peak of April 25th, at 74.80.
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