Today we are looking at the Brent Crude continuation chart. Once again we see the 38.2 Fibonacci Retracement come into play and on this occasion the Bulls defended the area well. The bounce from this 992 level tells us that the recent sell off was just a correction and not an overall trend reversal. In early trade today we are seeing the Bulls make some modest gains following on from a strong session yesterday. Further confirmation that the Bulls are back in the driving seat was the convincing push through the Marabuzo line at 102.60 and the fact we crossed back above the 20-day moving average. All is looking fine here but the big test lies just above at 107.97, our high from the 17th of March.
Indicators in Play
Fibonacci introduced his sequence of numbers to mathematics back in the 1200’s. These numbers appear in all walks of life but have an eerie influence on trading. We use the 38.2 level as an indication of the strength of the correction or indeed if the longer-term trend has changed or not. The decision rides on our ability to hold above this Retracement line or our failure at this point.
Summary
For those wishing to buy a dip the chance has now gone and we will wait to see how we deal with this 17th of March high. Although most of the talk is Bullish, our failure at the high mentioned above is a big concern and we will probably see the Bears come out to play when we get there.
David has been
analyzing and trading the worlds financial markets for the past 25 years. After an initial grounding with Mercury Asset Management and Warburg Securities he went on to set up his own brokerage operation in London. Since then he has appeared regularly on Bloomberg Television and been involved in providing analytics on behalf of some of the worlds major exchanges. He is also a member of the Society of Technical Analysts.
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