Oil is breaking the range
Oil is warning us again that the risk-off in markets could come as it has been rejected from long-term resistance and downside support 43.50-43.85. We are within a long-term downtrend channel with well-defined breakout levels. For the clear downside reversal continuation from here, we need to see a price action break confirmation below 39. A break and a follow-through above 43.85 are required for the upside bounce and a continuation higher to channel top.
On a daily chart, we can see that the pair has broken below the wedge support line 41.80 and is testing the horizontal resistance 39 for a complete downside breakout and a continuation. Look for the short trade entries upon a break below 39 with. Our trading system is indicating a potential of 900 points of profit. The short trade entries invalidation to come only on a clear daily close above 42 and would trigger stops.
We have used the combination of the top-down trading analysis to get these key levels explained in the charts.
