Wednesday’s been all about the USD, and the almost certain rate hike from FED. If the USD’s affected then all instruments quoted in USD will be affected too and by that I mean commodities.
In today’s analysis, I’d like to show you the situation on brent oil, where the price is one step from a major buy signal.
Oil’s currently looking bullish. The main reason for that is the bounce off the 100 USD/oz and the inverse head and shoulders pattern which has emerged as a consequence of that bounce. We’re now in the process of creating this formation’s right shoulder, which means that the full buy signal hasn’t been yet triggered.
The neckline (red) hasn’t been broken yet but that’s not the only resistance stopping a rise here. Another one is the mid-term down trendline, which is connecting lower highs in June and July (black). Apart from that, we also have the green horizontal resistance on the 108.5 USD/bbl.
All that being said creates a situation where it’s still too early to claim a full bullish victory. For a legitimate signal, we need to see the price breaking all three resistances mentioned above and setting foot around the blue rectangle.