Brent oil edged higher on Thursday after losing 15% over three days, including more than 9% on Wednesday. The decline broke support at $100, which now acts as resistance.
Brent oil edged higher in early Thursday trading after heavy losses over the past three days. On Wednesday alone, Brent lost over 9% of its value.
Partial profit taking lifted the price from a new multi-week low of $93.40. Significant technical supports contained the sharp fall, including the 50% retracement of the $70.13/$117.43 rally, the converged and ascending 100/200DMAs, and the daily cloud base.
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Broken $100 zone turns into resistance
The technical picture has weakened significantly after the break of strong supports at the $100 zone, which combined a psychological level, trendline support and the daily cloud top. Negative momentum strengthened, and the 10/20DMA formed a bear-cross.
The broken $100 zone has reverted to significant resistance that should ideally cap upticks. It also marks the fourth, corrective wave of a five-wave cycle from the $117.40 peak.
An oversold stochastic, on the other hand, contributes to signals of correction. That correction should be limited if the current optimistic view persists, and it may offer better levels to join the bearish market. Resistance levels sit at 96.92, 100.00, 100.61 and 102.03, while support levels are at 93.62, 92.78, 90.00 and 88.19.
Source: ActionForex
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