By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Oil is falling again. On Monday, April 27th, Brent is approaching $20.30 (-5.2%) amid investors’ concerns that global stocks may yet be overlooked.
Global demand for oil remains weak and that’s quite normal. However, global supply isn’t going down and that’s a major risk. Last week, US Department of Energy reported a solid growth in oil stocks, up to 518.6 million barrels, which is pretty close to the highest reading of 2017, whine the indicator was equal to 535 million.
As one can see, the existence of the OPEC+ agreement and commitment of Texan oil producers to reduce the oil extraction are not enough to calm investors down. As long as the fundamental background, demand in other words, is far from reaching stability, the commodity market will remain very volatile.
Most likely, this week will bring another wave of volatility in oil – the economic calendar is full of important reports.
Get our Weekly Commitment of Traders Report: - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
In the H4 chart, after finishing the first rising impulse at 25.00, Brent is consolidating around this level. Considering the fact that the instrument has broken the descending channel, the main scenario implies that the price may continue the ascending wave towards 35.50. However, this scenario may no longer be valid if the pair breaks 23.60 to the downside. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving to break 0 to the upside, thus indicating further growth inside the uptrend on the price chart.
As we can see in the H1 chart, after finishing the ascending impulse at 25.00 and forming the consolidation range between 23.60 and then 26.55, Brent has completed another descending structure to return to 23.60. Today, the pair may grow to return to 25.00. If the price falls and breaks 23.60, the instrument may correct towards 21.00. However, if the price grows and breaks 26.55, the instrument may continue trading upwards inside the third ascending wave to reach 31.05 and then start a new correction to return to 26.55. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: its signal line is rebounding from 20. Later, the line is expected to grow towards 50 and break it, thus boosting the uptrend.
Any predictions contained herein are based on the authors’ 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.