Reviewing the oil market on the XBR/USD chart as of August 26, when Brent crude was trading near $79 per barrel, we noted the following:
→ The price was developing within a descending channel (highlighted in red) and nearing its upper boundary, which could potentially act as resistance.
→ A crucial support level was identified (marked in yellow).
→ We anticipated that the bulls would need to demonstrate their resolve when encountering resistance around the $80 level.
Since then, Brent crude oil has:
→ Turned downward after failing to sustain a position above $80, continuing its decline within the red channel.
→ Accelerated its drop, breaking through the critical support around the $75 level.
Bearish sentiment has been driven by OPEC+ plans to boost oil production, indicating a shift away from output cuts intended to keep prices elevated.
Is Further Decline in Brent Crude Oil Possible?
From a technical standpoint, the XBR/USD chart today suggests that sellers are maintaining control, with the price now in the lower half of the red channel, and the RSI indicator moving into oversold territory.
Following a roughly 10% drop in Brent crude oil prices since last Monday, the likelihood of a short-term upward correction seems reasonable.
However, considering the above, a significant resistance area is likely around $74.50, where:
→ The median line of the red channel is situated.
→ The yellow line, which previously acted as support for several months, is expected to now serve as resistance after being breached.
In a worst-case scenario, Brent crude oil might fall to the lower boundary of the channel, approaching the psychological level of $70.
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