Brent Oil Approaches Major Buy Signal Amid Strong Buyer Momentum
12 August 2024
In today's technical analysis, let's delve into Brent Oil, which remains in a downtrend, but is inching closer to a significant buy signal. The downtrend, which began in early July, continued until the start of August, but last week we saw a strong bullish reversal. This reversal, observed on the H1 and H4 charts, has formed a flag pattern. Typically, the lower boundary of a flag is considered more crucial in a downtrend, but in this case, the upper boundary holds more significance as it has been tested and respected more frequently. Currently, the price is testing this upper line of the flag.
In addition to the flag’s upper boundary, Brent Oil is also testing a blue downtrend line, placing the price at a critical juncture between these two resistance levels. While this setup might typically suggest an ideal spot to consider short positions, the lack of seller momentum is notable. Instead, buyers appear strong, pushing the price higher, and a bullish breakout seems increasingly likely.
If the price closes above these two resistance levels, it would generate a compelling buy signal, suggesting the potential for a continued upward move. Conversely, if the price fails to break through and instead bounces off these resistances, it would signal a possible sell opportunity, indicating a continuation of the bearish correction. Given the current strength of the buyers, the bullish scenario appears slightly more probable at this point.