Is the price of Brent finally finding some support?

Brent oil has been dumping over the last few weeks as country’s have put pressure on Russian oil by imposing a price cap. This has sent the spot price down to its lowest level in 12 months. With important economic data to come in the next few days in including updated Cash rates from Central banks in Europe, the UK, and the USA. Furthermore, the CI figures from the USA will be released which as well will provide an update as to the extent at which inflation has become controlled or is still yet to peak. Any result that encourages growth whether it be lower interest rates in the future, or some other stimulus may be seen as a positive for the price of oil. Similarly, as China awakens from its Covid 19 slumber the demand for brent may increase lifting the price again.

From a technical perspective over the last few days the price has finally found some support, at least in the short term. On the daily chart, the price is near a long-term support zone and is almost due for e a bounce. The price is sitting on a ledge between $77 and $79 as it consolidates and determines what it will do next. This is also supported by the RSI which is showing an oversold signal that has shown in the past to be a decent predictor of a bounce in some form.

Looking closer at the hourly chart, the price is in a short-term consolidation. This is supported by contracting volume after the initial rise in price. This may indicate that a breakout is imminent. It would be ideal to wait for a rush of volume and a price increase above the $78.21 before entering and then the initial target is $80.71.

The price of oil is still very much influenced by geopolitical and macroeconomic factors and there can be highly volatile.