Brent Price Analysis: Pennant breakout seen on 4H chart

• Brent looks north with pennant breakout on the 4-hour chart. 
• Oil rallies on OPEC+deal, if any, could be short-lived.

Brent is trading near $34.60 per barrel at press time, representing a 2.4% on the day.

The black gold could continue to gain altitude over the next few years, as the pennant breakout on the 4-hour chart confirmed early Thursday indicates the six-day-long consolidation has ended and the recovery rally from recent lows near $25 has resumed. 

The breakout is backed by an above-50 or bullish reading on the 14-day relative strength index and suggests scope for a test of the resistance at $35.33 (top end of the pennant pattern). 

Stronger gains may be seen if the OPEC+, a loose organization of 24 oil-producing nations led by Saudi Arabia and Russia, agrees to bigger-than-expected production cuts. However, analysts are of the opinion that supply cuts would not be enough to compensate for the massive demand destruction brought on by the coronavirus outbreak. As a result, rallies, if any, could be short-lived. 

OPEC+ is scheduled to meet on Thursday to discuss outputs cuts in order to put a floor under oil prices, which fell by over 65 percent in the first quarter.

4-hour chart

Trend: Bullish

Technical levels