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Brent oil price forecast this week January 13 to 19: price could remain range-bound

By Rakesh Upadhyay

Analysis of Brent Oil to show what to expect in the next few days

Like most commodities, the fundamentals of supply and demand dictate the price of Brent oil. As a war in the Middle East increases the risk of supply disruption from the most oil-rich area of the world, Brent crude prices start pricing in a risk premium. The same had happened after the escalation of tensions between the US and Iran.

However, on January 8, the US President Donald Trump said that “Iran appears to be standing down.” Following this news, the traders heaved a sigh of relief and the risk premium that was built into the price vanished.

The traders are now likely to shift their focus back on to the fundamentals. However, if the US-Iran conflict flares up once again, Brent oil price could rally. Therefore, the traders should keep an eye on the news before initiating any positions. 

It is difficult to predict whether the conflict has ended or if it will reignite again. However, Brent oil technical analysis of the weekly chart and the daily chart can throw some light on what the traders can expect in the next few days. 

Brent oil price chart: weekly

Brent oil moved up early last week but as it became clear that the conflict between the US and Iran is likely to cool down, traders booked profits aggressively.

That dragged the price back into the $67.50 to $55.73 range. The sharp decline shows the nervousness of the bulls at higher levels. Currently, the price has dipped to the moving averages, which are likely to act as a strong support.

Both moving averages are flattish and the RSI is close to the midpoint, which suggests a balance between buyers and sellers. If the bears can sink the price below the moving averages, a drop to $60 is possible.

On the other hand, if the price bounces off the current levels, the bulls will make another attempt to carry the price above $67.50. While the weekly chart points to a consolidation, let’s see what the daily chart project shows.

Brent oil price chart: daily

Brent oil opened the week with strength but could not sustain the gains. The bulls tried to defend the support at $67.50 on January 7 but the bounce on January 8 was sold into. The fall picked up momentum on a break below $67.50 as it might have triggered the stops of short-term traders.

The bulls are attempting to defend the support at the downtrend line. Currently, the price is stuck between both moving averages and the RSI has dipped into the negative zone. This shows that bulls are losing their grip.

If the price slips below the 50-day SMA, a drop to $60 is possible. If this support also cracks, the decline can extend to $58 and below it to $55.73. On the other hand, if the price bounces off the 50-day SMA, the bulls will attempt to break out of $67.50 once again. Do we find any trading opportunities? Let’s find out.

Brent oil forecast for January 13 to 19. How to trade it

The very short-term traders can wait for the price to bounce off the 50-day SMA before initiating long positions. The first target objective is a move to $65.70 and if this level is scaled a move to $67.50 is also possible.

Contrary to our assumption, if the bears sink the price below 50-day SMA, long positions should be avoided.

FURTHER READING: Oil steadies as Middle East tensions subside

FURTHER READING: Saudi Arabia oil attack: The impact on oil prices

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