On the monthly timeframe, we have observed Fibonacci Extension from the October 2018 peak to the March 2020 lows. Critical resistance for the commodity is seen at $130, and once violated, Brent can see a faster move towards previous life highs of $145-150.
On the daily time frame too, the commodity is exhibiting accumulation like pattern with higher lows being formed since March 2022 representing that every dip is being bought into while price-wise resistance in the near term is seen at $121.50.
Even on a relative basis vs DXY, Brent continues to outperform the DXY since July 2021.
To conclude, such multi-year breakouts in price and relative strength are not a common phenomenon and generally lead to huge rallies in the stock, commodity and index. Brent is likely to gain more strength above $121.5-122 and test 161.8% extension seen at $130.
(The author is a Technical and Derivatives Analyst, Ashika Group.)