Oil was massively oversold in the past few weeks however the price has enterted in a major support area.
Fundamental Analysis
Oil has firmly entered in a bear territory and the recent comments from the Saudi oil minister may actually support the market. The minister has said that Saudi Arabia sees need to cut 1mb/d from October level. We are seeing investors taking advantage of the overselling of the oil price in the recent weeks and a corrective move is strongly on the card. The current momentum could push the oil price towards the 62.50 and a break of this would open the floor towards the next resistance of 63.20.
Technical Analysis
In terms of technical analysis, the below intraday (4 hours) chart for Brent shows that we have a clear downward trend. This is because the price is trading below the downward trend line and as long as the price remains below this trend line, there will be no hope for the bulls.
In terms of volatility, the price did pierce the lower line of the Bollinger band and now it has moved above the 20-day moving average (shown in blue ). Having said this, the price is trading within the Bollinger band, this gives us the confirmation that the volatility isn’t hitting its high notes.
The current upward move in the price may be challenged by the 50-day moving average (shown in yellow) and then you have the 100-day moving average (shown in green).
The RSI has also bounced from its extreme oversold zone and this confirms that the current upward move is backed by some momentum.
The support zone is shown by the green horizontal line
The resistance zone is shown by the red horizontal line
