Brent Crude Pulls Back After Overbought Conditions

Brent crude oil prices have pulled back after surging more than 25% since mid-July, according to CMC Markets. This correction is consistent with technical analysis, which suggests that the price has become overbought after rising above the upper Bollinger Band on July 23.

The RSI had climbed above 70, a level often used as an indicator of overbought conditions. Prices also reached the 61.8% Fibonacci retracement level, measured from the May 4 peak to the lows recorded around July 2, coinciding with a broader area of resistance around $101 per barrel.

Brent is now testing its 10-day exponential moving average, which has historically served as a reliable level of support and resistance. A break below this average could push prices lower, with the next area of support around $83 a barrel, coinciding with the 20-day moving average.