In today’s analysis, I’ll focus on Brent Oil, though the same pattern applies to WTI.
Since mid-January, oil has been in a strong downtrend, struggling to gain traction. Yesterday, the price briefly touched new yearly lows, but instead of continuing lower, those lows were swiftly rejected, forming a hammer candle (marked with a red rectangle).
This hammer appeared right at a critical support level, corresponding to the lows from late 2024 (marked with a blue line). The fact that oil recovered above this support is a positive signal. However, as we transition from the Asian to the European session, the market isn't showing any immediate follow-through from buyers.
How to Approach This Setup?
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A strong bullish daily candle today would confirm a rebound and suggest potential upside.
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However, if today ends with another bearish candle, it would be a clear sign that demand is weak and that sellers remain firmly in control.
For now, patience is key—let’s see if buyers use this hammer as a launchpad for recovery or if it turns out to be a failed signal.