Is this a game changer for Brent crude?

Brent crude is showing some interesting price movement, having already proved our chartist wrong.

Brent crude

When we reviewed Brent crude last month in an utter panic, due to "the Saudi thing", we'd glued on our usual caveat, saying 'to justify concern in another direction, the price of Brent requires drip below $56.50'. Guess what? In the period since, Brent managed to hit $56.1, filling the first requirement to open the tap of doom.

Increasingly with the markets, we're opting to play things a little safer, introducing something we call movement weights. This phrase, long used in-house, essentially provides the first calculation to signal whether a drop (or gain) is real. 

In the case of Brent, the situation now is of weakness below $56.1 being capable of provoking reversal down to an initial $53.78. In itself, a fairly insignificant movement but, should $53.78 break, we'd take this as a triggering motion which should provide real reversal.

Thus, now below $53.78 looks capable of entering a cycle down to an initial $48. Secondary, if broken, calculates at $46 and firmly takes the black stuff into a region where it's entirely possible $40 should provide an eventual bounce level.

When we apply similar logic to demand, movement in the other direction is viable as the stuff now needs to exceed $63.80 to confirm any trend break is genuine.

Recovery such as this should trigger moves to an initial $67.5 with secondary, if bettered, at $70.50. This sort of thing takes the price into a region where a longer term $77 looks possible - something very liable to be game changing from a big picture perspective. We've pencilled $90 as an eventual target!

Source: Trends and Targets      Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.