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Andreas Zanin
Analysis | May 18, 2021

KTM Commodity Weekly: Lacks direction-update

With Monday closing, the Brent crude oil price approached its multiple resistance levels at $69.80-70.00. A decisive breakout and close above $70 would open gates towards March high $71. The real strength would emerge once close above $71 daily and Weekly. In this case, $72.50 and $74.50 are the following levels to watch out for.

On the weekly chart, 14-MA has been offering solid support since April. During the same period, one can witness the higher low and higher high pattern for six straight weeks.

The daily price action has reaffirmed support since last week, and on the upside, the trend is supportive, but the market needed to take out the recent high at $69.80 to confirm the trend once again. The market has struggled to hold above $70 rounded recently, prompting a retracement back to $66.30. The daily indicators point the price action higher in the immediate term, but the market must take out the key resistance at $70 to set the scene for a higher wave.

Looking at the demand side, easing restrictions in the U.K., the U.S., and Europe, and increasing daily vaccine doses are set an optimistic tone on the demand side. Traffic at U.S. airports reaches a new pandemic-era high, according to the U.S. Transportation Security Administration.

https://www.tsa.gov/coronavirus/passenger-throughput

Positioning:

Speculators reduced their net long in ICE Brent by 20,737 lots over the reporting week, to leave them with a net long of 295,833 lots as of last Tuesday, according to ING.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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