21, October 2016

Brent (a 4-hour chart)

General overview

Oil prices moved lower on Thursday after a rally on the back of large U.S. oil inventory drawdown last week.

Current situation

Brent prices gave up its recent highs and sharply fell in the Asian session on Thursday. The ongoing decline could be attributed to some profit taking from bulls following a 3-day rally. Sellers pushed the price below 52.50 and met a barrier in the 52.00 region. The oil quotes continued with a decline during the North American session. The price broke the 50-EMA and headed lower towards the 100-EMA in the 4 hours chart. The 50-EMA is neutral in the same chart. The 100 and 200 EMAs maintained their bullish slope. The resistance is at 52.50, the support comes in at 51.50 dollars per barrel.

MACD indicator is at the centerline. If the histogram enters the negative territory, that will indicate sellers’ growing strength. If MACD returns into the positive area the buyers will take control over the market. The RSI indicator is near overvalued territory, favoring a new move lower.

Trading recommendations

Our near term outlook is bearish. To trigger additional downward momentum oil prices need to break 52.00 and move below 51.50.