An inverted head and shoulder pattern is spotted for Brent oil wherein the neckline is as shown in red horizontal line with blue troughs as shoulders and orange lines as the head. The oil is presently resting at the neckline at 62 albeit with low volumes. An uptrend is likely to be validated with an increase in volume as it breaks above the neckline. The head shoulder bottom (or inverted H&S) signifies an end of a downtrend and that the price would head higher.
The immediate resistance as seen earlier is at 64.54 (blue horizontal line), which is also a 38.2% Fibonacci retracement level when traced from Oct 3 high of 86.71 to 50.05, Dec 26 low. The next strong resistance stands tall at 70.52 (black horizontal line, near the 61.8% Fibonacci retracement).
The dampener could be the softening global demand with the slowdown in the economies at large. This even prompted IMF to forecast a stable oil price for the coming 4-5 years. Earlier IMF talked of high oil prices aiding growth in Gulf economies but with sharp price movements, the risk lingered on. With supply concerns and weak oil output growth, oil may be silent before it reaches out for higher territories.
As signaled from the above, a run up towards 64.54 is sighted in the near future provided it is supported by increasing volumes.