Oil on boil! Brent crude prices can rally to $145-150

After a multi-year breakout witnessed in August 2021, 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.

On 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.

Even on a relative basis vs DXY, Brent continues to outperform the DXY since July 2021.

To 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.)