We started the week with a big sell-off in oil, retreating down to the consolidation floor of late June. Seasonal cycles however suggests oil as a buy on any dip to a good support given the on going US driving season. Underscoring this is the drop in Crude Oil prices by 3.4 million barrels as reported by the Energy Information Administration. Also providing a lift to oil prices are the prospects of rate cuts from the US and hopes of a demand recovery from China.
Resistance
- 87.63 – Previous week’s high
- 86.70 – Intraday Consolidation High/Low
- 85.93 – Intraday Consolidation Low
Support
- 85.02 – 20D Moving Average
- 83.70 – Daily Consolidation Floor
- 83.13 – 50D Moving Average
The daily high wave spinning top in Brent crude suggests bear’s have lost momentum the moment we tested the 83.70 consolidation floor from June. We currently find ourselves bouncing off the 20D Moving Average with a daily stochastic crossing higher and out of oversold areas. Given this we see Brent Crude as an immediate buy with sops under 85.02. Immediate objective will be a test of the 85.93 price point. Continue to see oil as a buy on dips in the immediate future as we remain in the middle of the US driving season.
