In today's Technical Analysis, let's take a closer look at Brent Oil, which started the week on a strong note but quickly gave up all gains, shifting the sentiment back to negative. Yesterday, in the second half of the session, Brent experienced a sharp sell-off, and the current technical picture suggests further downside ahead.
Looking at the bigger picture, the beginning of March brought us a bullish correction, which formed a rising wedge pattern, marked with black lines. The price was gradually climbing within this structure, but yesterday, after testing the upper boundary of the wedge and the yellow resistance, Brent was strongly rejected and dropped sharply.
The intensity of the drop was so strong that it broke the lower boundary of the wedge, which is a clear bearish signal. Now, with this breakdown confirmed, the price is poised for further downside. While we are currently seeing a small hammer formation in early European trading, this appears to be just a minor bounce rather than a reversal of the trend.
With the bearish sentiment firmly in place, Brent Oil’s next target is the red horizontal support, which acted as a key level in previous months. Traders should watch for confirmation of further selling pressure, as a retest and rejection of the broken wedge support would provide an opportunity for additional short positions. On the other hand, a sustained move back above the lower wedge boundary would invalidate the bearish outlook.