Brent crude prices are moving higher with the recent activity showing accelerated gains. The May contract is finally showing a turn higher in the moving averages, as the 20-day moving average is rising at USD 46.26/bbl, while the 60-day moving average is now at USD 45.18/bbl. From a charting perspective, the move above the USD 52.20/bbl resistance area (USD 52.21/bbl was the Jan. 06 high on the continuation chart) helps to confirm the breakout higher, with the USD 56/bbl level kept as the near term target. Some support is layered from USD 52.20/bbl to USD 50/bbl, but more significant chart support is placed at USD 48.00/bbl. As long as Brent crude prices stay above USD 48/bbl, look for upticks to dominate with potential to see a 23.6% retracement of the tumble from the USD 147.50/bbl high at USD 62.47/bbl.
The weekly continuation chart is finally seeing the consolidative pattern turn into a reversal pattern. From a trend perspective, the downside is still at risk as the 13-week moving average is at USD 46.56/bbl and the 50-week moving average is at USD 85.55/bbl, showing a bear trend is still in place. However, with the 50-week momentum indicator turning higher then dips should find support, and the break above USD 52.21/bbl leaves a reversal pattern in place that targets an upswing towards USD 68/bbl in time. The erosion of resistance at USD 46 to USD 48/bbl was supportive of the upside break, and if this break can be sustained, further gains should be seen. Fibonacci ratio retracement targets point to USD 78.72/bbl on a 38.2% retracement of the fall from USD 147.50/bbl.
Strategy – One-Month View Brent crude is expected to continue to rally over the coming months towards USD 56.80/bbl and then to USD 62.47/bbl.
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