by RoboForex Analytical Department
The commodity market suffered another stress last week. On Monday, the situation reached stability, but it remains quite complicated; Brent is trading at $95.60.
The asset closed last trading week near its 5-month lows.
The key reason for these negative vibes is the same’ global expectations of a worldwide recession. Economic slumps all over the world will eventually lead to a decline in demand for fuel, hence a drop in energy prices.
Another local factor that puts pressure on is the USD strengthening.
Last Friday’s report from Baker Hughes showed that over the past week, the Oil Rig Count in the US lost 7 units, down to 598. In Canada, the indicator increased by 3 units, up to 140. Shale oil companies are in no hurry to invest more money in production.
On the H4 chart, after breaking 100.00 downwards, Brent is still correcting and has already reached the short-term target at 94.80. Possibly, today the pair may form one more ascending structure to test 99.90 from below and then complete the descending wave by reaching 90.00. After that, the instrument may resume trading upwards with the target at 122.00. From the technical point of view, this scenario is confirmed by the MACD Oscillator: its signal line is moving near the lows outside the histogram area and may later grow to reach 0.
As we can see in the H1 chart, after finishing the descending correctional structure at 95.15, Brent is consolidating above this level. Possibly, the asset may break the range to the upside and start another growth with the target at 100.00. Later, the market may resume falling to reach 90.00. From the technical point of view, this idea is confirmed by the Stochastic Oscillator: its signal line is moving near the highs above 80. Later, the line may fall to break 50 and continue falling to reach 20.
