Yesterday, Brent crude's decline left two nearby technical levels, $68.3 and $67.7, untested. Quotes tend to revert to these thresholds, and the closer they are to current prices, the greater the chance of a rebound. Nevertheless, any resulting bounce would be short-lived. The primary trend for oil is still down.
Bearish sentiment is fueled by the prospect of further OPEC+ production hikes and the resumption of crude exports from Iraqi Kurdistan through Turkey. This situation exacerbates worries over a looming supply glut. The alliance and its partners, including Russia, are expected to give the green light to more output increases totaling 137,000 barrels per day (bpd).
The risk of a US government shutdown is another factor contributing to the prevailing pessimism and further fueling concerns about demand. A temporary closure would disrupt a broad spectrum of state services and likely delay critical economic data from being released. This includes Friday's payroll report—a key driver for Federal Reserve policy decisions.
Our ultimate recommendation is to buy Brent crude. Profits are taken at $67.7. Stop loss is placed at $65.6. This deal goes against the primary downtrend and implies increased risk.
The volume of your open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
