Brent oil falls to support after reaching overbought conditions
Brent crude has pulled back towards its 10-day exponential moving average after becoming overbought near the upper Bollinger Band, leaving short-term support in focus as Middle East headlines continue to shift.
Founder, Mott Capital Management
Brent pulls back towards short-term support
Brent crude prices have surged by more than 25% since mid-July and are now pulling back towards technical support at the 10-day exponential moving average. Brent had become overbought after rising above the upper Bollinger Band on 23 July, with its RSI climbing above 70. As a result, the current Brent pullback is consistent with technical analysis.
Fibonacci resistance capped the rally
Prices had also reached the 61.8% Fibonacci retracement level, measured from the 4 May peak to the lows recorded around 2 July. The 61.8% retracement is a key technical level and currently coincides with a broader area of resistance around $101 per barrel.
Brent crude oil, February – present
Sources: TradingView, Michael J Kramer
The 10-day EMA is the near-term line to watch
Brent is now testing the 10-day exponential moving average, which has historically served as a reliable level of support and resistance, particularly since mid-April. A break below the 10-day exponential moving average could push prices lower, with the next area of support around $83 a barrel. That level also coincides with the 20-day moving average and, perhaps more importantly, a break of that support might signal a change in trend.
Holding support would keep the uptrend intact
However, if Brent can hold support at the 10-day exponential moving average, the broader uptrend is likely to remain intact despite continually shifting headlines about geopolitical tensions in the Middle East.
Brent oil extends rebound after holding key support
Brent crude has rebounded sharply from support around $70.50 and moved into the mid-$80s as geopolitical risk returns to energy markets. Momentum indicators have improved, but the market now needs to hold above the former $82.50 resistance area to keep the bullish setup intact.
