Intraday Market Analysis: Brent Crude Oil Analyzed

Brent Intraday Strategy

Brent crude oil has benefited from OPEC’s decision to cut production earlier this year. Crude oil prices remained firm in the commodity markets despite the Fed’s rate hike and projections for 3 additional hikes throughout 2017. We will analyze Brent crude oil on several time frames to provide our intraday outlook for the commodity. One of the key events later this week is the crude oil inventories on Wednesday.

Brent Crude oil Weekly Chart

Please click on the chart to enlarge:

Brent Crude Oil Weekly Chart 19/12/16

The weekly chart is always required to determine the broader trend for Brent crude oil. The price has affirmed the reversed Head-And-Shoulders (H&S) on the weekly chart where the recent weakness appears to be corrective. The price may re-test 52.90 before reversing higher, targeting 62.50. It is essential to have a confirmation from the market the support at 52.90(H&S neckline) will hold. The 4hr chart may provide greater clarity to our intraday strategy for Brent.

Brent Crude Oil 4hr Chart

Please click on the chart to enlarge:

Brent Crude Oil 4hr Chart 19/12/16

The 4hr chart reveals a top H&S is being painted at the time of this writing. The key intraday resistance is seen at 55.80 where the neckline of the top H&S is seen at 52.90. Initiating a short trade at current levels means the potential drawdown is a re-test of 55.80 by the market. It is a potential drawdown as such re-tests cannot be guaranteed to take place but must nevertheless be anticipated. 52.90 is the neckline of the reversal pattern. A 4hr close below 52.90 strengthens the possibility the reversal has been affirmed. The initial target upon a successful breakout is 51.20. The reason why 51.20 is marked is because the price may find support at that region and lead to corrective gains towards 52.90 before a resumption of the downtrend. Once 51.20 gives way it may pave the way for stronger selling, targeting 49.50. The 100% objective of the intraday H&S is seen at 47.80.

As the weekly chart reversed H&S may have been affirmed we find 51.20 to be a reasonable target for Brent upon a break below 52.90. Initiating a short trade at current levels would make 52.90 a more appropriate target or alternatively, setting 51.20 as the target and continuing to monitor the position at the 4hr close. For those that wish to base their entry on the weekly chart rather than the 4hr chart, 52.90 must be re-tested and hold at the weekly close to affirm further gains in Brent crude oil.

We used Brent FEB17 contract to provide our intraday strategy for the commodity.