Brent's Bearish Breakdown
05 October 2023
Diving into the intricate waters of oil trading, it's paramount to highlight the notable moves observed in the market recently, particularly the pronounced downward shift. Oil's trajectory in September began with remarkable promise— the initial 19 trading days of the month boasted impressive numbers and painted a bullish picture for spectators. Yet, as the calendar inched towards the 28th of September, a correction loomed and swiftly gained momentum, unraveling and eventually peaking in its intensity yesterday with the creation of a notably expansive bearish candle.
From a technical perspective, the catalyst behind this turbulent descent stems from the breaching of two pivotal supports, effectively triggering a cascade of selling orders. The activation of these orders, primarily emanating from stop-losses set for preceding long positions, expedited the downswing. Brent oil pierced through its meter map trend line, illuminated in red, and crumbled below the horizontal support stationed at $88 per barrel, depicted in green. These supports have now morphed into resistances, casting a shadow of bearish sentiment over the market for as long as prices languish beneath them.
A resurrection of the bullish sentiment on oil hinges upon prices clawing their way back above the red line. However, the probability of such a revival currently appears somewhat constrained, providing traders with a meticulous landscape to navigate in the coming trading sessions. The dynamism and complexity of the current oil market provide a rich canvas for traders, demanding a meticulous and astute strategy to effectively harness the prevailing trends and navigate through the bearish storm.