Brent Oil drops below the down trendline

By Tomasz Wisniewski|

Published: March 08 2023, 16:33 GMT+0

Brent Oil drops below the down trendline

In the last two days, Jerome Powell’s hawkish comments have led to a consensus that there will be a 50bp interest rate rise in March, causing indices to drop and the dollar to rise. While there has been a small correction in prices, oil has not seen this trend. Yesterday, the stronger dollar hurt oil prices and today we can see that the price of oil is continuing to drop.

Last week, Brent Oil broke a key resistance, the long-term down trendline (blue). A breakout of the down trendline is generally considered a positive signal that ends a bearish trend and starts a bullish reversal. However, this breakout was a false bullish breakout (green), which often signals a strong sell in the opposite direction. As the price has come back below the blue down trendline, the current sentiment is negative and indicates a bearish trend.

We are also currently inside the flag pattern (orange), and a breakout of the lower line of this formation would confirm a sell signal. This scenario is currently more probable.