Welcome to a brand new trading month!
Let’s kick things off with a quick look at these bearish plays on Brent crude oil and EUR/JPY.
Here are the levels I’m watching.
Breakdown alert!
EUR/JPY looks ready to bust through the bottom of its falling wedge pattern on the 4-hour time frame. If this pushes through, the pair could tumble by the same height as the chart formation or roughly 500 pips.
What are technical indicators saying?
The 100 SMA just crossed below the 200 SMA to confirm that bearish vibes are present, possibly taking the pair below the 143.00 handle pretty soon.
Stochastic is hovering close to the oversold region and seems to be pulling higher, suggesting that euro bulls could still put up a fight.
If that’s the case, watch out for a move back to the wedge resistance around the 144.00 major psychological level. Keep your eyes peeled for reversal candlesticks if you’re hoping to catch a bounce!
Brent Crude Oil (UKOIL) 4-hour Chart
Looking to trade commodities this week?
I’m seeing this neat descending channel forming on the 4-hour time frame of Brent crude oil, and it looks like another test of resistance is in the works.
Price is bouncing off support and is pulling up to the 38.2% Fibonacci retracement level nearby. A higher correction could reach the 50% level around the mid-channel area of interest, 100 SMA dynamic inflection point, and $90 per barrel mark.
An even larger pullback could test the 61.8% Fib near $92.50 per barrel or the channel top at $95-96 per barrel.
If any of these Fib levels hold as a ceiling, Brent crude oil could slip back to the swing low at $80.73 per barrel or lower. Technical indicators are pointing to a continuation of the downtrend after all.
The moving averages made a bearish crossover, confirming that resistance levels are more likely to hold than to break. Also, Stochastic is in the overbought region, which means that exhausted buyers could allow sellers to take over soon.
