Brent crude oil remained well bid overnight, but broader picture remained capped by headwinds from supply concerns whereas traders remain to focus on G20 summit in Argentina. We could expect a relief rally/oversold rally if market senses a trade deal between US-China.
The new technical profiles are consistent with a temporary bounce in oil prices.
We forecast the Oil price will be in a rangebound between 56.00$-70.00$ until the upcoming OPEC’s meeting. We also believe recent massive landslide push the daily indicators into highly oversold territory. The daily indicators are very bullish, and the weekly RSI has been stood still at the oversold level. Under these conditions, keep an eye on the support zone 58.00-56.00$. Until 56.00$ is the support (weekly closing basis), watch out for 64.50$, 68.50 and 70.00$ levels.
A weekly close below the 55.00$ confirmed the downward continuation which opens the way towards supports around 50.00$.
Things to watch in Brent:
50MA (Monthly) 58.00$
200MA (Weekly) @56.50$, coincides with 50.0% fib reaction
Earlier swing low at 50.75$ its Jan 2017 low
The 61.8% fib reaction of 27.00$-86.60$ rally finds at 50.00/49.70$.
Hence, we forecast a limited “downward approach.” Brent oil might have put in a meaningful bottom between 56.00$-50.00$ and could consolidate sideways for few days.