A Bearish Gap on the Brent Crude Oil Chart
As the XBR/USD chart shows, Brent crude oil prices formed a gap at the start of this week: while Fridays session closed at 75.60, Mondays opening price dropped below 72.60.
According to Reuters, this development is tied to the fact that Israels recent missile strike on Iran did not impact oil or nuclear facilities, reducing the immediate risk of escalation.
Will Brent Crude Oil Prices Continue Falling?
In terms of technical analysis for XBR/USD today:
The price is within a descending channel (shown in red) that has been active since early summer. A bullish breakout attempt on 7 October was unsuccessful (marked by a red arrow), and Brent crude has since dropped over 10%. Price consolidation between 17-22 October near the median of this red channel confirms its current relevance.
Bulls had an opportunity to show strength with a bounce (marked by a blue arrow) from Support Line 1, which forms part of an upward structure represented by blue lines. However, todays bearish gap erased these gains.
This allows traders to consider two scenarios:
Bearish Scenario: After breaking below Support, Brent could continue along the red descending channel. If the channels median line holds as resistance, this bearish outlook may be confirmed.
Bullish Scenario: Todays bearish breach of the 18 October low could prove false, leading to a potential recovery back toward the structure of three blue lines.
Ultimately, which scenario plays out will largely depend on volatile news related to geopolitical tensions, the U.S. presidential election, and economic data from major economies.
Read more: https://fxopen.com/blog/en/oa-a-bearish-gap-on-the-brent-crude-oil-chart/
Text source: Forex Trading Blog
