The key trigger that pushes the rally is that investors remain confident of the supply shortage in the commodity market. It was suggested earlier that the demand might become surplus in 2022 but there are no reasons for that so far.
Another factor that makes the oil price rise is the escalation in the Middle East with explosions in Iraq and the United Arab Emirates. They raise concerns about future oil deliveries and help the commodity market to go higher.
As a result, the market remains bullish and bullish only.
In the H4 chart, having completed the ascending structure at 88.85 along with the correction down to 85.00, Brent has rebounded from the latter level; right now, it is trading upwards with the target at 93.00. After that, the instrument may correct to return to 88.85 and then form another ascending structure to reach 95.00. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving above 0 inside the histogram area, thus indicating a further uptrend in the price chart.
As we can see in the H1 chart, after forming a new consolidation range around 90.15 and breaking it to the upside, Brent has reached the short-term target at 91.40. Today, the asset may continue growing towards 91.63 and then correct to return to 90.15. Later, the market may resume trading upwards with the target at 93.00. From the technical point of view, this idea is confirmed by the Stochastic Oscillator: after breaking 50 to the upside, its signal line is expected to continue growing and reach 80. Later, it may resume falling to reach 20.
By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.