Looking at the daily chart of Brent oil, it is immediately noticeable the resistance zone of $65-75 per barrel, in which the price is now plunging. This zone was actively tested first in the second half of 2021, then the price repeatedly tried to overcome it in the first half of 2023, and now it tries to break through it again with several strong impulsive downward movements. According to the "law of the genre" it is unlikely to succeed on the first attempt, now only a breakout and a return upward movement above the level of $80 per barrel is possible.
Later, it is quite likely that Brent will go back to this zone, and on the second or third attempt will break through it, and then oil prices will open the way down to the levels of $45-50.
From a technical point of view, the argument for such a course of events is the graphical pattern of multiple price returns to the level, after which, with high probability, this level weakens and breaks through.
From a fundamental point of view, the development of this scenario is supported by a slowdown in the global economy, primarily in China, which significantly reduces demand for oil.
As noted earlier, OPEC+ group's efforts to reduce production of oil and keep oil prices at an acceptable level did not elicit a proper response from the market. Oil market participants apparently do not see any serious reasons to reduce global supply in the medium term.
But this is all in the perspective of a year to a year and a half, provided that the economic situation in China does not start to improve.
Now it is necessary to wait for Brent to start to draw reversal patterns on hourly timeframes, and after they are formed to open a buy position with a target at $81 per barrel.
Overall recommendation is to buy Brent, provided that reversal patterns are formed.
Take profit at the level of $81. A stop-loss could be set at the level of $65.
This content is for informational purposes only and is not intended to be investing advice.
