Yesterday’s price action on Brent Crude Oil prices inflicted serious structural damage on the Charts. The crash in crude prices was one of the most severe ones in recent years and it forces us to take a look at its repercussions on the higher time frame charts.
If we speak first above the higher time frame Monthly charts, the level of $70.76 is the 200-Month Moving Average for the Brent Crude Oil. Moving on to Weekly Charts, the zone of $72 – $72.50 represents confluence of a multi-year pattern supports in form of a upward rising trend line. So, in a way, the zone of 7$70 to $72.50 was expected to act as a major support for the Brent Crude prices. This expectation was based on the simple premise that the crucial resistance levels that are once broken on the upside are expected to become supports on the way down.
Having said this, the previous price action on Brent Crude Oil has not only sent the prices below the very important 200-Month Moving Average, it has also breached a multi-year pattern support and a rising trend line on the Weekly Charts.
If we examine the repercussions of this price action, it will be no surprise that the $70- to $72.50 price range will now become extremely stiff resistance for the Brent Crude Oil prices. Any technical pullback, which might occur given the extremely oversold conditions on the Daily Charts, are expected to get stalled in $70- to $72.50 zones.The above references the authors opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
Milan Vaishnav, CMT, MSTA is a qualified Independent Technical Research Analyst at his Research Firm, Gemstone Equity Research & Advisory Services in Vadodara, India. As a Consulting Technical Research Analyst and with his experience in the Indian Capital Markets of over 15 years, he has been delivering premium India-focused Independent Technical Research to the Clients. He presently contributes on a daily basis to ET Markets and The Economic Times of India. He also authors one of the India’s most accurate “Daily / Weekly Market Outlook” — A Daily / Weekly Newsletter, currently in its 15th year of publication