By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
At the start of another June week, Brent remains under bearish pressure. The asset is trading at 37.58 and has significant reasons for that.
The key thing that triggered these sales in the instrument is investors’ concerns about the slow growth of the demand for commodities – not as active as expected. These concerns only got worse after the American report on the new cases of the COVID-19 showed kind of the start of the second wave. There was an upsurge in the number of new cases after the country had seen flattening of the curve, which really made people think about a new wave of the outbreak. If so, it is a serious threat to the oil price demand recovery.
Apart from this, the oil had a technical reason for a correction after a flashy growth before. The “black gold” really seemed “overbought” and one “spark” was enough to start a correction.
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In the H4 chart, Brent is moving within the downtrend towards 37.00. Later, the market may correct to the upside to reach 39.55 and then form one more descending wave with the target at 35.80. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving below 0, thus implying further decline of the price chart towards the above-mentioned target.
As we can see in the H1 chart, Brent has broken 38.00 to the downside. Possibly, the pair may fall with the short-term target at 37.00. After that, the instrument may start a new correction to test 39.70 from below. Later the market may form one more descending wave to return to 37.00. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: its signal line is mo0ving below 20. In the future, the line is expected to grow to reach 50, fall to return to 20, and then start a new rising movement towards 80.
Any predictions contained herein are based on the author's particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.
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