The commodity market remains worried about the spread of the coronavirus disease. Brent is falling and trading at $69.70.
In some countries, especially when it comes to Asia, which is the main concern about the oil behaviour, the number of new COVID-19 cases and strains continues to increase. This fact bothers and upsets investors, who are very worried about the oil demand.
There is a chance that after a while the countries may re-introduce anti-coronavirus-related social restrictions, which may have a significant influence on the global demand for oil. This is the factor that is currently putting pressure on oil prices.
The summer driver in the form of vacation travels and journeys will slowly fade away and the commodity market will have to deal with its usual demand/supply factors, which are not so cheerful.
In the H4 chart, after rebounding from 67.70 and forming the ascending impulse towards 71.77, Brent has completed the descending structure to reach 69.15, thus forming a new consolidation range between the two later levels. If the price rebounds from 71.00 and then reaches 69.00, the asset may continue the correction towards 68.00. On the other hand, the instrument may break 71.00 to the upside and form one more ascending wave with the target at 72.50. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is currently testing 0 from above. The line is expected to rebound and resume moving upwards. Otherwise, it may continue falling towards the lows.
As we can see in the H1 chart, Brent has reached 69.15, which is considered a short-term downside target. Later, the market may grow towards 70.40 and then start another decline to reach 68.90. After that, the instrument may return to 70.40. In fact, the asset is expected to consolidate around the latter level. If the price breaks this range to the upside, it may resume growing to reach 72.50; if to the downside – form a new descending structure with the target at 68.00. From the technical point of view, this idea is confirmed by the Stochastic Oscillator: after breaking 20, its signal line is moving upwards to break 50 as well. If it succeeds, the growth will continue up to 80.
By Dmitriy Gurkovskiy, Chief 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.