KTM Commodity Weekly: Three technical factors and one fundamental factor firing up the Brent
The latest vaccine news and Biden victory are the two key factors firing up the Brent crude oil. This week’s Oil report is an extension of last week’s report.
In our last week’s commodity report, we revealed three bullish technical factors. Now we have one significant fundamental factor which could alter the demand perspective in the coming months. The highlight last night was the press release from Pfizer. As per media sources, Pfizer’s early data Shows Vaccine is more than 90% Effective. An astonishing 90% success rate triggered a massive risk-on sentiment.
After the vaccine news hit the screens, Airline and transportation stocks enjoyed a big party overnight. Shares of Airlines rallied between 15-35% across the globe in anticipation of higher demand in 2021. With the ban on global travel, Brent crude oil price fell as low as $19 in mid-April. Since then, the price has rallied more than double. Now global travel optimism back to the table after the Pfizer announcement.
As a result of the travel/demand optimism, Brent oil rallied nearly 10% at one point but closed with 7% gains at $42. The A-B-C pattern suggests oil could rally further towards $43.50, previous multiple highs, and 200EA located at $44.
Support exists at $39.50 and $38.80. Flipside resistance is located at $43.80-$44. A decisive breakout above $44 would further fire up the oil price towards $46.50 and $50. In the medium and longer-term, we expect a target of $58-60 levels.
In addition to the fundamental news, technical indicator RSI is suggesting a positive divergence. The daily 14 periods RSI has been moving higher since early September. In the same period, oil prices were drifted lower. Dip buying is a favorable trend. A weekly close above $46.60 is the game-changer for medium and longer-term targets.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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