Brent oil prices stabilized amid the announcements of introducing measures to boost the stock and property markets by the Chinese government. This helps to offset concerns about increased supply and tighter monetary policy in the United States and Europe.
According to Fed Chairman Jerome Powell's speech in Jackson Hole, the central bank is likely to keep monetary policy unchanged at its September meeting. As ING Groep NV strategist Warren Patterson, this could cause oil prices to rise.
Meanwhile, oil prices increased in Asian trading but then lost momentum. China's decision to halve the tax on stock trading to support markets temporarily raised fuel costs.
Analysts are also waiting for the release of the updated China Manufacturing Purchasing Managers Index (PMI). According to forecasts, the PMI will show an even more depressing state of the second largest economy.
Patterson believes that the news of China's economic stimulus provided additional support for oil prices. However, in the short term, they are likely to remain in the current range due to ongoing demand problems and increased supply from Iran and Venezuela.
The rally recorded at the beginning of the month pushed oil prices to the highs of early 2023. The price increase was due to the efforts of the leading OPEC+ producers (Saudi Arabia and Russia) to support oil prices by reducing exports.
The Brent oil chart shows the correction formation on the H4 timeframe.
In terms of wave analysis, the price is now in the formation of the fifth ascending wave. The fifth wave followed the price breaking out of the descending resistance of the last fourth correction wave.
MACD indicator (standard values) shows divergence. This gives a leading signal to change the trend. The nearest resistance is at 86.75.
The short-term outlook for Brent oil suggests buying.
The target is at the level of 89.30.
Part of the profit should be taken near 86.75.
The Stop-loss is set at 80.40.
Bullish trend has a short-term character, so the trade volume should not be more than 2% of your balance.