As the XBR/USD chart shows, Brent crude opened this week’s trading around $65.70, but today the price is near $66.80 (around +1.7%).
Oil is being pushed higher by geopolitical factors, including:
→ Israel’s strike on Hamas leadership in Qatar;
→ Trump’s calls for Europe to impose tariffs on buyers of Russian oil.
It is also worth noting that over the weekend an OPEC+ meeting took place. Although the decision was made to increase production, the volumes were smaller than analysts had expected.
Technical Analysis of the XBR/USD Chart
After the surge of extreme volatility at the end of July, Brent crude price fluctuations have been forming a descending channel (shown in red), with the following developments:
→ in September the price tested the lines dividing the channel into quarters (2 September – QH test, 5 September – QL test);
→ this week’s rise in oil looks like a return to the median, where supply and demand tend to balance out (in other words, where market participants more often agree on a fair price).
From a bullish perspective:
→ the $65.00 level appears to be an important support, having already proved its strength in August and September;
→ the sequence of higher highs and lows A→B→C→D→E suggests that pullbacks have been roughly half the size of bullish impulses – a sign of strong demand.
From a bearish perspective:
→ August price action suggests that a bear flag has formed as an interim correction within the prevailing downtrend;
→ the $67.50 level may act as strong resistance, as supply forces there were able to trigger a bearish breakout of the pattern.
Taking the above into account, we could assume that Brent prices may stabilise around the median in the short term, before sliding along it downwards – unless the balance of supply and demand shifts sharply (for example, under the influence of new geopolitical factors or the release of major economic indicators).
Also read: The Dollar Consolidates Ahead of Inflation Data
