One of the assets that capitalized on Wednesday’s market euphoria was oil. Brent oil, in particular, saw a strong bounce off the long-term lows, with prices surging sharply midweek. However, that momentum proved difficult to sustain, and Thursday brought a noticeable correction. Still, for traders looking deeper into the charts, Brent is painting an intriguing technical picture.
A potentially bullish formation is developing — an inverse head and shoulders pattern, clearly marked by the orange structures on the chart. As of Friday morning, the market is shaping the right shoulder of this formation, thanks to renewed buying interest. That said, there’s no official buy signal just yet. For that to occur, we need a confirmed breakout above the green horizontal resistance, which serves as the neckline of the pattern.
Should the price close above that neckline today, a buy signal would be activated. But here’s the caveat: the upside potential is limited. Just above this breakout level lies a stubborn resistance at $69 per barrel, marked in yellow. This zone acted as key support in Q1 and now threatens to cap any bullish continuation.
If buyers fail to push through the green neckline — or worse, are firmly rejected at the $69 level — the pattern would likely collapse. A strong rejection would bring sellers back in line with the prevailing long-term downtrend, potentially accelerating a new bearish wave.
So while Friday’s movement offers a glimmer of hope for oil bulls, the road higher is anything but clear. In a market still dominated by broader selling pressure, traders need to remain cautious. The trend is still your friend — and in oil’s case, that trend is down.