The downside break overnight saw Brent print fresh 6-year lows and, judging from the impulse nature of the move, appears far from over.
OPEC failed to address growing concerns of the oil glut they are happily supporting. With production at near-record highs and global demand down, oil production is significantly outweighing demand and pushing prices down further.
With the USD strengthening and OPEC more than happy to continue pumping then the seasonal tendency for oil prices to rise throughout winter are literally on the back-burner. Until either one of those scenario's changes then Brent and WTI are poised to break to lower levels over the coming week/s.
The break below 46.87 proved to be a pivotal moment for Brent as it confirmed some variation of a topping pattern. This is where I like to allow some flexibility with my technical analysis for trading purposes as, regardless of whether you would label it a triple top or head and shoulders pattern, the price objective of 39 is the same for both, as is the breakout level used to confirm it.
I have drawn a bearish channel which also coincides with the weekly S2 and monthly S1 supports, so we may well see profit taking around current levels and a modest bounce higher towards 42.80 resistance. However I am paying more attention to the peaks of each cycle (with a red arrow) which show downside momentum is accelerating, so I see this bearish channel as being lower probability than a downside break of it.
I do however see a bounce towards 42.80 as feasible but a break below Weekly 3s invalidates the bearish channel, and below 40 could see a run towards 38.38 pretty quickly.