Brent Crude closed just under its May range play ceiling and is currently consolidating just above the region. With the upcoming driving season our bias for oil moving forward is for further upside. Though moving past the years highs will be unlikely without any further catalyst. Note that beyond cyclical factors demand for oil remains weighed by weakness in China. Even if we were to see the central banks easing sooner it remains unlikely that this will have a big impact on speculative fervor.
Resistance
- 86.71 – Intraday Consolidation Low
- 85.65 – 50D Moving Average
- 85.10 – April Lows
Support
- 84.25 – May Range Play Ceiling
- 83.58 – Previous Intraday Consolidation Resistance
- 83.13 – Intraday Consolidation Resistance
With its solid close and bullish maru bozu candle we are looking for oil prices to follow through on its current break out. Note we have spent much of the day thus far, consolidating above the Range Ceiling for May even as our daily stochastic has pushed overbought with the daily breakout. Further reason to look for a push higher. For now we need bullish engulfing candles before going long or if we were to see a failed break lower generating long tails in the hourly chart. It would take a daily level bearish reversal pattern such as a gravestone doji or Bearish Engulfing for me to consider shorting.
