Brent Crude has continued to surge with a huge spike seen during February-March 2022, mainly led by the Russia-Ukraine conflict. Since then, Brent Crude has broadly been consolidating between $116-95.
On the monthly timeframe, we have observed Fibonacci Extension from the October 2018 peak to the March 2020 lows. Critical resistance for the commodity is seen at $130, and once violated, Brent can see a faster move towards previous life highs of $145-150.
ET CONTRIBUTORSOn the daily time frame too, the commodity is exhibiting accumulation like pattern with higher lows being formed since March 2022 representing that every dip is being bought into while price-wise resistance in the near term is seen at $121.50.
ET CONTRIBUTORSEven on a relative basis vs DXY, Brent continues to outperform the DXY since July 2021.
ET CONTRIBUTORSTo conclude, such multi-year breakouts in price and relative strength are not a common phenomenon and generally lead to huge rallies in the stock, commodity and index. Brent is likely to gain more strength above $121.5-122 and test 161.8% extension seen at $130.
(The author is a Technical and Derivatives Analyst, Ashika Group.)