NYMEX Brent: Building up Bearish Bias

NYMEX_DL:BZ1!   Brent Last Day Financial Futures
Oil reversed gain quickly after the multifaceted sword chopped whatever little was left of supply-side momentum, keeping Oil prices afloat. The US labor market’s resilience pushed back hopes of potential “FED Monetary easing” until the second half of the year while the budding US banking crisis shook the ground beneath Oil prices.

Technically, Brent tried to sustain an upside rally and breached the 200-day Moving Average of $83 per barrel in January. However, it came crashing down below the short-term upward trend line (black), as the “ceasefire talks” emerged in the Middle East.

So does the end of the Geo-political crisis, mean the beginning of Oil’s turmoil? The optimism of investors has been shaken and it would be unrealistic to ignore the negative sentiment that is setting in. Short-term investors are advised to follow the “Sell on rise strategy”, whenever Brent tries to hover around 200-Day Moving Average.

Currently, oil markets are valuing prices more on demand-side concerns rather than fears of conflict in the oil-rich Middle East. Brent is falling below the long-term triangle formation, and if the bearish trend continues, it could easily test the long-term support of $70-72 per barrel zone. A slight increase in banking stability threat could trigger massive offload in long positions. Unless OPEC+ comes to Oil’s rescue, price projections seem bleak.

We prefer the below trade setup:
- Entry: Short around 200 moving average at 83.50
- Target: 77.00
- Stop loss buy for short positions at 86.20


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