Brent Oil Breaks Resistance: A New Era or Another False Breakout?
10 July 2023
The past week ended on a high note for oil, with a significant increase and the establishment of new mid-term highs. Today, we'll delve into Brent oil, which exhibits an incredibly technical situation.
Here's what happened: Brent oil has been in a sideways trend since the beginning of May, with a horizontal resistance at 77.6 and a horizontal support at 71.7. Towards the end of June, the price bounced from the support to test the resistance. Encouragingly for the buyers, the price managed to break the resistance marked in blue, and currently, it hovers above this former resistance, which has now become support. This is a typical price action scenario.
The question now is whether this breakout will be legitimate and whether the price can maintain its position above this support level, or whether we'll see a false breakout as we did at the end of May and the start of June (orange). So far, the current upswing appears promising, and as long as we remain above the blue line, the sentiment is positive. However, if the price drops below the blue line and breaks the lower black line of the flag, it will trigger a strong sell signal. Thus, for the moment, the sentiment is positive.