The commodity market is now experiencing a huge stress due to concerns of the reduction in demand for energies. Early in the week, Brent dropped to $85.35 and no other negative factors have appeared since then. However, those that are already here are enough for investors to remain worried. The key aspect is a progressive decline in the global economy, which might cause a serious drop in demand for commodities in general, and in oil in particular.
The Dollar index has reached its multi-year highs and may yet continue to improve. For the commodity market, it’s a negative signal.
In addition, there is a technical factor – when the asset was trying to break $90, bears immediately became more active and the price fell.
On the H4 chart, having broken 88.20 to the downside, Brent continues to fall towards 80.50 and may soon reach 83.00. Later, the market may correct to test 88.20 from below and then start another decline with the closest target at 80.50. From the technical point of view, this scenario is confirmed by the MACD Oscillator: its signal line is moving below 0 and may later continue trading to reach new lows.
As we can see in the H1 chart, after forming a new consolidation range around 88.20 and breaking it to the downside, Brent is still moving downwards with the short-term target at 83.00. Later, the market may correct to return to 88.20 and then resume falling towards 80.50. From the technical point of view, this idea is confirmed by the Stochastic Oscillator: its signal line is moving near the lows below 20. Later, the line may grow to rebound from 50 and resume falling to return to 20.
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