Brent Crude Oil Price Update – Gap Resistance Comes in at $28.73 to $28.80
International-benchmark Brent crude oil futures gapped lower on Monday at the start of the trading week, as more government ordered lockdowns to curb the spread of the global coronavirus pandemic that has slashed the demand outlook for crude.
Brent crude oil prices have fallen for four straight weeks and have lost about 60% since the start of the year with traders having to contend with the twin shocks of the demand destruction caused by the coronavirus pandemic and the unexpected oil price war that erupted between producers Russian and Saudi Arabia earlier this month.
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At 01:01 GMT, June Brent crude oil is trading $27.81, down $1.19 or -4.10%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through $26.34 will signal a resumption of the downtrend. The main trend will change to up on a move through $53.66. That’s highly unlikely at this time given the bearish fundamentals. Prices are expected to rise if Saudi Arabia and Russia call off their price war, but low demand expectations will prevent a change in trend.
The minor trend is also down. A trade through $32.83 will change the minor trend to up. This will also shift momentum to the upside.
Daily Technical Forecast
If the downside momentum continues then look for a break though the main bottom at $26.34. Crossing to the weak side of the steep downtrending Gann angle at $25.66 will put the market in a bearish position. This could lead to a test of the September 2003 main bottom at $25.05.
Taking out $25.05 will indicate the selling pressure is getting stronger with the next target the April 2003 main bottom at $23.05.
On the upside, the gap at $28.73 to $28.80 is minor resistance. Filling in the gap will indicate the buying is getting stronger. If this creates enough upside momentum then look for the rally to possibly extend into the minor top at $32.83.
The biggest fear for short-sellers should be a truce between Russia and Saudi Arabia. This is likely to trigger a massive short-covering rally.