Brent Crude still has our Fibonacci Extension at 135.58 capping things at the moment. Its also worth noting that the red days are becoming more aggressive along with the fact that we do indeed have Bearish Divergence confirmed on the RSI. We will now need to watch our last dip low at 121.85. If this were breached we would be looking for a much bigger correction with 110.17 as the objective. We would expect the Bulls to make some sort of stand at the above mentioned 121.85 support but the selling would accelerate rapidly if this failed to hold.
Indicators in Play
Fibonacci Extensions measure the retracement values from an original set of points (a low to a high) to apply at a user-selected third point. This then uses the basic Fib formula to show extensions and future targets.
Bearish Divergence on the RSI occurs when the market makes a higher high but the RSI indicator makes a lower high. These can be powerful reversal warnings but should be used in conjunction with other tools for identifying an entry point.
Summary
We are now looking to sell strength in Brent Crude with 128.56 an intra day level where we would dip our toe. If this all goes to plan, we would be adding to shorts more aggressively with a breach of the 121.85 support.
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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