Watch out, oil bulls!
I’m seeing signs of an uptrend reversal on the short-term time frame of Brent crude oil.
Can the commodity price fall through its neckline soon?
Brent Crude Oil (UKOIL) 1-hour Chart by TradingView
Is that a sketchy head and shoulders pattern I’m seeing?
Brent crude oil might be done with its climb, as the commodity price is gearing up to test the neckline of its reversal formation.
A break below support around $84 per barrel could be enough to confirm that a selloff of the same height as the pattern is due.
But what are technical indicators saying?
Both Stochastic and moving averages are still pointing to the presence of bullish vibes, so I’d be careful when going short.
The 100 SMA is above the 200 SMA to reflect upside pressure while the 200 SMA is also holding as dynamic support. If buyers step in at current levels, Brent crude oil could bounce back up to the highs around $86-86.50 per barrel.
At the same time, Stochastic is dipping into oversold territory to indicate exhaustion among sellers. Turning higher would signal that bulls are charging again.
Most oil-related headlines have been bearish so far this week, though.
The release of 26 million barrels of crude oil from the U.S. Strategic Petroleum Reserves has sparked oversupply concerns once more, following the larger than expected inventory builds reported by the API and EIA.
To top it off, persistent recession fears and the possibility of more Fed tightening are keeping a lid on risk rallies in the near-term.
Just make sure you check out the average volatility UKOIL when trading this one!
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