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  • Brent oil is on the defensive, having created a bear flag on the hourly chart.  
  • A below-forecast China NBS Manufacturing PMI could weigh over Brent.

Brent oil is has created a bear flag on the hourly ahead of key China data releases.

A bear flag is a continuation setup which often ends up accelerating or refreshing the preceding downside move.

The black gold is currently trading at $71.31 per barrel.

Hourly chart

As can be seen, the lower edge of the bear flag is currently located at 70.86. Acceptance below that level would confirm a flag breakdown and create room for sell-off to $67.00 (target as per the measured move method).

A breakdown will likely be confirmed if China’s NBS Manufacturing PMI for April prints below 50.00 signaling contraction.

The PMI returned to expansionary territory above 50 last month, triggering speculation the factory activity in the world’s second largest economy may have bottomed out.

That optimism will likely fade if April PMI falls back below 50.00.

Trend: Bearish