Brent oil fell significantly in November and now risking another downside break. The price is currently testing the top of 2021 summer and the lower line of the falling wedge formation. Falling wedges usually tend to break to the upside. But with the recession risk rising and the weakening China economy, demand fears moving the markets. On the other hand, US strategic reserves falling historically fast, China is preparing to end the covid-zero policy and FED will slow down the rate hike in the coming months.
If the markets decide that it is enough positive news to change the downside trend, brent oil is technically in a good place to make a comeback. While testing the strong 78 support, the deviation from the 200-day moving average reached 2 standard deviations. A return to or at least get close to mean correction could happen if the key support holds. Of course, the main trend is still showing down and a downside break probability is still high enough to worry. A down breakout could lead the price below 70 as soon as this month.
