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James Hyerczyk
Brent Crude Oil

International-Brent crude oil futures closed higher on Friday despite an International Energy Agency report that showed demand growth dropping to its lowest level in 11 years. The IEA said global demand to May from January grew at its slowest pace since 2008, hurt by mounting signs of an economic slowdown and a ramping up of the U.S.-China trade dispute. Buyers instead were motivated by Euroilstock data that showed total crude and product inventories of 16 European nations in July were slightly lower than in June.

On Friday, October Brent crude oil settled at $58.53, up $1.15 or +1.96%.

Daily October Brent Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. Earlier in the week, the downtrend was reaffirmed when sellers took out a pair of main bottoms at $58.42 and $58.14, but the selling pressure stopped at $55.88, well above the December 24, 2018 main bottom at $52.04.

The main trend will change to up on a trade through $65.43. We’re not likely to change the trend on Monday, but we could see a normal retracement into a short-term retracement zone.

The major retracement zone controlling the longer-term direction of the market is $59.07 to $63.58.

The short-term range is $65.43 to $55.88. Its retracement zone at $60.66 to $61.78 is the next upside target. Since the main trend is down, sellers are likely to come in on a test of this zone.


Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at $58.53, the direction of the October Brent crude oil market on Monday is likely to be determined by trader reaction to the long-term Fibonacci level at $59.07.

Bullish Scenario

A sustained move over $59.07 will indicate the presence of buyers. If this creates enough upside momentum then look for a potential drive into the short-term retracement zone at $60.66 to $61.78. With the main trend down, look for sellers to show up on a test of this zone. They are going to try to form a secondary lower top.

Bearish Scenario

A sustained move under $59.07 will signal the presence of sellers. The first downside target is a minor pivot at $57.59. If this fails then look for the selling to continue into last week’s low at $55.88. Don’t be surprised by an acceleration to the downside if this low is taken out. The daily chart indicates there is room to the downside with the next major target the $52.04 main bottom.

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