The Brent Oil has plunged aggressively today and has ignored two important support levels and now is approaching a crucial static support, a valid breakdown below this level will open the door for a major drop. The rate has moved sideways in the last weeks, has formed a minor chart pattern and now has escaped from this pattern and is somehow expected to drop deeper.
The Oil is going down also because the Loonie has plunged aggressively versus the US dollar, the USD/CAD has edged higher today and has reached new highs, the pair has rallied as the USDX has managed to jump again above the 102.05 static resistance, a further increase will force the Oil to drop much deeper.
The Loonie has decreased further and has ignored the positive Canadian data, the Housing Starts have increased from 209K to 210K, beating the 205K estimate, while the Labor Productivity rose by 0.4%, matching expectations. Moreover the Building Permits rose by 5.4% in January, beating the 3.1% estimate, the economic indicator has increased significantly after the 4.4% drop in December 2016. The Oil price has taken a serious punch from the United States Crude Oil Inventories, which have increased to 8.2 million barrels in the previous week, the indicator has come in better versus the 1.1M estimate and better versus the 1.5M in the previous reading period.
You can see that the rate has decreased sharply today and has ignored the median line (ML) of the major Weekly ascending pitchfork and the support from the 61.8% retracement level, right now is approaching the 53.03 static support, this level represents a very strong static support, remains to see what will happen when will hit this level.
The rate was attracted by the important confluence area formed at the intersection between the 53.03 static support with the lower median line (lml) of the minor ascending pitchfork and with the median line (ml) of the minor descending pitchfork, a valid breakdown below this confluence area will accelerate the sell-off, the next major downside target will be at the 50% retracement level.