Brent and WTI technical analysis: Waiting for a trend form?

As the charts below shows, Brent and WTI have both been trading in a range since the beginning of May, with the North Sea grade ranging between $101-$105 and the US grade trading between $92 and $97.

A variety of factors have contributed to the sideways motion, but above all markets are locked in a battle of sentiment, with negative economic news one day balancing out against positive signs the other. Importantly however, technical analysis shows that if we are about to embark on another trend, then we could be looking at a strong bullish one.

The reason for this is that the lower Bollinger band has combined with the lower support area to form a very strong area of support that could form the lowest point of the next upward trend. What’s more, today both WTI and Brent dropped below these respective areas but climbed straight back up, unable to closer below them, thereby confirming the support areas as the charts below show.

It could be a few days before we confirm a possible upward trend, but the moving average indicators could be the key to demonstrating the upward move. At the moment on both the Brent and WTI charts above we see that the 10-day moving average (MA) has been mostly steady over the last week, with the 5-day oscillating above and below, confirming the range-trending scenario. Thus if we’re to see Brent and WTI break out into an upward trend then the first key signs will be for the 5-day to maintain its current position above the 10-day MA, and for the 10-day MA to lift itself away from its current position on both graphs, that is above and beyond the 20-day (the middle Bollinger band).