Oil prices continue to be under downward pressure. From a technical perspective, Brent is now forming a bearish reversal pattern resembling a head and shoulders shape. There are at least three targets for the downward movement of Brent prices: 81.7, 81.2 and the final target is the 80.5 level. The last target is the previous local high, which has not been retested and therefore pulls the price to itself like a magnet.
The most important fundamental factor exerting downward pressure on prices is the position of the US Federal Reserve, according to which interest rates will remain at current levels in the near future, slowing economic growth and limiting demand for oil. In addition, large oil and fuel inventories in the US are also weighing on oil prices.
According to the CME Group’s reporting on oil derivatives, the following changes occurred over the past day:
Open interest indicators were virtually unchanged. While the CALL/PUT ratio for all options (all expirations) was 1.37 yesterday, today it is 1.36.
Yesterday’s CALL/PUT ratio on the near-term contract was 1.03, today it is 1.04.
However, significant changes occurred in the volume of positions for buying and selling oil.
While yesterday the ratio of CALL/PUT volumes for all contracts was 1.18, today it is 0.83. Yesterday’s ratio of CALL/PUT for the closest contract was 0.92, today it is already 0.70.
This means that the bearish sentiment in the oil market will continue at least until the opening of the American session today (Friday). After the opening, the bearish sentiment is likely to intensify if there are no major negative events in the world during the day.
The overall recommendation is to sell Brent.
Profit could be taken at 81.2. A stop loss could be set at 83.3.
The value of the possible loss should not exceed 2% of your deposit funds.
