Brent: a fall will follow an abrupt rise

13 June, 2014

Current trend

This week the price of Brent has jumped up. On Wednesday OPEC ministers decided to keep output quota at 30 million barrels a day. However, expected demand for crude oil will be 30.4   million barrels a day, which makes the quota insufficient.

Meanwhile, true trigger of the Brent rise is the conflict in Iraq. Islamist militants from Islamic State in Iraq and the Levant took over several cities and approached Iraqi oil regions. Investors are in panic and crude oil Brent goes up to the ten-month highs at 114.10.

Support and resistance

We expect small correction to the level of 111.80 (Fibonacci retracements of 61.8%). However, the price will continue to rise up to the levels of 114.00 and 115.50. Technical indicators give controversial signals. Bollinger Bands show a divergence, confirming upward trend. The price chart broke through the upper MA, promising certain correction. MACD histogram is in positive zone, its volumes are increasing. Stochastic lines have crossed in overbought zone and are turning down.

Trading tips

It is recommended to open short trades with targets at 111.80 as soon as the price breaks down the level of 112.80. Long trades with take-profits around 115.50 can be opened above 113.40.

No change

Recommendation  sell

Entry Point  112.80

Take Profit  111.80

Stop Loss 

Key Levels 111.80, 112.80, 113.40, 114.00, 115.50.

 

Recommendation  buy

Entry Point  113.40

Take Profit  115.50

Stop Loss 

Key Levels 111.80, 112.80, 113.40, 114.00, 115.50.

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