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Brent Crude Testing a Descending Triangle Resistance

Looking at the 1H chart, we see that Brent Crude Oil prices have been consolidating since last week. It has formed a descending triangle.

Today, traders were bullish on Brent Crude, supporting it above the 106.80 triangle support and pushing it to 108.20 by the end of the 7/23 session. Here Brent Crude is testing that triangle resistance. 

(Brent Crude 1H Chart 7/23)

A break above the triangle resistance is not a very significant breakout. A break below 106.80 would be more indicative of a bearish continuation. A break above 108.30 for example would clear the triangle resistance, but the market would still be in consolidation mode.

A break of 108.62 will be necessary to open up further bullish outlook in the short-term. The 1H RSI needs to push above 70 as well. In addition to showing a strong bullish attempt, it needs to show a failed bearish attempt before the technical picture shows us bullish oil prices again. A failed pullback would be one that holds above the central pivot of the current triangle around 107.55.

(Brent Crude 4h chart)

When you look at the 4H chart, you see that a break above the triangle has the 109.45 level, or 38.2% retracement in sight. However it will be going against a prevailing downtrend. Thus we should limit the bullish outlook.

To the downside, a break below 106.80 first opens up the 105.60 low. Below that, the next key support might be the 2014-low of 103.95 made in April.