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Andreas Zanin
Analysis | July 28, 2021

KTM Commodity Weekly: Shallow dips

Brent crude oil has lost nearly 14% from the July peak, but buyers proved the dips remain shallow. The combination of the 100MA on the daily chart and the rising trend line brought the buyers back to the table.

After printing some price corrections, we witnessed a decent bounce to reclaim the level of $73.50 on a weekly closing basis. This suggests bulls continue to have the upper hand, but we still believe we are not out of the woods yet. We study the action around the 200MA (Monthly). Above here, our next interesting levels to watch out for are $76 and $77.50.

On the lower side, the support layers of oil are placed between $70 and $67. Below here, $64.50 and $60 exists. On the higher time frame, we can see oil price traversing and sustain above the important resistance of the 200-monthly simple moving average.

The recent development of the Delta variant pauses the global growth optimism but the fear short live. On Monday late Asia hours, Singapore announced that it aims to relax more virus curbs, including starting to allow quarantine-free travel in September, marking the first time it’s set out a timeline to reopen borders that have been mostly shut for more than a year reported by Bangkok Post.

 Chief economist Daniel Lacalle tweeted that “Global PMIs suggest peak recovery is behind us.” 

The below chart published by the Yardeni Research also suggests that global growth story has reached a peak for time being.

Hence, we expect oil will remain in a range-bound territory say between 65-77$ in the coming weeks. The current bullish trend will be truncated it we lost the support at $60.

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

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