Current trend

The price of Brent Crude Oil has been falling for the third week, trading at 81.80 today, amid a softening geopolitical situation.

Investors expect a soon conclusion of a truce between Israel and the Palestinian Hamas movement, which will help reduce the risk premium included in oil prices. Thus, on Friday, US Secretary of State Antony Blinken said that after the agreement conclusion, which should be announced soon, the Israeli hostages would return home, and the situation in the region would stabilize.

Concerns about the stability of the Chinese economy also affect the asset negatively. Last week, officials admitted that achieving the government’s goals might be difficult. At the same time, fuel oil imports in the first half of the year decreased by 11.0% to 11.95M tons, confirming the decline in oil demand in the second world economy.

Despite the significant weakening of the asset, in the medium term, the market may resume growth against the September reduction in US Fed rates and the increased likelihood of the election of the Republican candidate Donald Trump as US President. The easing of monetary policy, for which all conditions are met, should help restore the national economy. A change in the White House administration may significantly reduce the tax burden on business, causing an increase in global oil consumption and supporting the prices.

Support and resistance

The trading instrument is approaching 81.25 (Murrey level [4/8]), after which a decline to the area of ​​79.69 (Murrey level [3/8]), 78.12 (Murrey level [2/8]), 77.15 (Fibonacci correction 50.0%) may follow. In case of a 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 develop.

Technical indicators confirm the development of negative dynamics: the MACD histogram has moved into the negative zone, Stochastic and Bollinger bands are reversing downwards, but the former is still in the oversold zone.

Resistance levels: 85.00, 87.50, 89.70.

Support levels: 81.25, 79.69, 78.12, 77.15.

Trading tips

Short positions may be opened below 81.25, with the targets at 79.69, 78.12, 77.15 and stop loss 82.40. Implementation period: 5–7 days.

Long positions may be opened above 85.00, with the targets at 87.50, and 89.70 and stop loss 83.70.