Current trend

Since the beginning of the month, Brent Crude Oil prices have been correcting, testing 82.81 (Murrey level [5/8]) around ​​five-week lows under pressure from Chinese macroeconomic statistics.

China’s Q2 gross domestic product (GDP) increased by 4.7%, reaching a low since the first quarter of 2023 and failing to meet the forecasts of 5.1%. June retail sales decreased from 3.7% to 2.0% against expectations of 3.3%, increasing fears of a decline in global demand for energy. However, the negative dynamics do not look sustainable since most long-term factors remain positive. Thus, the probability of the US Fed’s monetary policy easing in September is increasing since all the necessary conditions in the American economy are met. Inflation is falling, the labor market is showing signs of cooling, and GDP growth is slowing. At the same time, the head of the regulator, Jerome Powell, said that an untimely adjustment of the interest rate would do more harm than good. Experts believe that the transition to “dovish” rhetoric will lead to the restoration of economic growth in the US and an increase in oil consumption.

In addition, geopolitical tensions in the Middle East persist, supporting the risks of interruptions in oil supplies to the market from the region. The American commercial oil reserves are showing a tendency to decrease due to the holiday season. According to the American Petroleum Institute (API), the indicator has been declining for three weeks, having decreased by 4.440M barrels recently. Under these conditions, a quick transition of the oil market to growth seems quite possible.

Support and resistance

The trading instrument is testing 82.81 (Murrey level [5/8]), consolidation below which will allow it to reach the 81.25 (Murrey level [4/8]) and 79.69 (Murrey level [3/8]) area. In case of breakout of the middle line of Bollinger bands (85.00), growth to the area of ​​87.50 (Murrey level [8/8]) and 89.70 (Fibonacci correction 38.2%) may follow.

Technical indicators do not give a single signal. Bollinger bands are reversing downwards and the MACD histogram is preparing to enter the negative zone. However, Stochastic is approaching the oversold zone and may reverse upwards.

Resistance levels: 85.00, 87.50, 89.70.

Support levels: 82.81, 81.25, 79.69.

Trading tips

Long positions may be opened above 85.00 or after a reversal around 81.25, with the targets at 87.50, 89.70, and stop losses at 83.50 and 80.20, respectively. Implementation period: 5–7 days.