Technical Analysis #C-BRENT : 2020-02-17

Recommendation:

Strong Buy
Strong SellSellNeutralBuyStrong Buy

Above 57.5

Buy Stop

Below 53.2

Stop Loss

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IndicatorValueSignal
RSI Buy
MACD Buy
Fractals Buy
MA(200) Neutral
Bollinger Bands Neutral
Parabolic SAR Buy

Chart Analysis

IFC Markets Tech Analysis

On the daily timeframe, the Brent: D1 is in a wide neutral trend. Now it has once again bounced off its lower boundary and is correcting up. A number of technical analysis indicators formed buy signals. The bullish momentum may develop in case Brent rises above its last high at 57.5. This level may serve as an entry point. The initial stop loss may be placed below the last fractal low, the lower boundary of the neutral range and the Parabolic signal at 53.2. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop level (53.2) without reaching the order (57.5), we recommend closing the position: the market sustains internal changes that were not taken into account.

Fundamental Analysis

The spread of the coronavirus has slowed down. Investors believe that its negative impact on the global economy may be limited. Will Brent prices rise?

Earlier, Brent prices fell 5 weeks in a row, as the coronavirus infection and its subsequent quarantine reduced oil demand in China. The International Energy Agency (IEA) estimated the decline in global demand by only 435 thousand barrels per day in the first quarter of 2020. This is not that much amid world consumption of about 101 million barrels per day. Let us note that even if demand falls, OPEC and independent oil producers are ready to cut production by 600 thousand barrels per day. This will be an additional volume to the already existing production limit of 1.7 million barrels per day. The World Health Organization said that an increase in the number of infected people with coronavirus in China is due to a change in methods of calculation and may not be a sign of deterioration of the situation.

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