A New Week of July: Brent Is Falling

Brent retreated to $106.56. There are a lot of opposite factors in commodities right now that make investors save strengths.

On one hand, the US is going to discuss oil production expansion with Saudi Arabia and these talks will require the American party to demonstrate the top of its diplomacy skills – Saudis are the only large oil producer that has enough available productive capacity. As a result, the US is trying to solve the oil supply coverage issue in the domestic market, which is very alarming. The talks aren’t expected to be easy – the US will have to offer something to spark Saudi Arabia’s interest.

On the other hand, oil is still being transported to the Euro through Caspian Pipeline Consortium, reducing some of the local risks.

This week, market players are recommended to keep a close eye on the Oil Rig Count report from Baker Hughes. Last week’s numbers were rather mixed.

On the H4 chart, having completed the correctional wave at 106.60, Brent continues to grow towards 110.50 and may later consolidate there. After that, the instrument may break the range to the upside and form one more ascending wave with the short-term target at 114.50. On the other hand, if the price breaks the range to the downside, the market may correct down to 105.50 and then resume growing to reach the above-mentioned target. From the technical point of view, this scenario is confirmed by the MACD Oscillator: its signal line is moving outside the histogram area and is quickly heading towards 0.



As we can see in the H1 chart, after finishing the ascending wave at 109.40, Brent is correcting down to 105.50, Brent is expected to rebound from the latter level and form one more ascending structure with the first target at 110.50. From the technical point of view, this idea is confirmed by the Stochastic Oscillator: after breaking 50, its signal line is falling towards 20. Later, the line is expected to rebound and resume moving towards 80.



By Andrey Goilov, Analyst at RoboForex

Disclaimer: Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.