Selling Brent oil in the long term

Donald Trump's victory in the race to become the next U.S. president will likely have profound economic consequences.

If Trump enacts just a fraction of his pledges — from higher trade tariffs to deregulation and increased oil production — the strain on government finances, inflation, economic growth and interest rates will be felt in every corner of the world.

Trump's fiscal pledges are seriously troublesome to both the U.S. economy and global financial markets as they promise to vastly expand an already excessive deficit.

Import duties, including a 10% universal tariff on imports from all foreign countries and a 60% tariff on imports from China, are a key plank of Trump's policies and likely to have the biggest global impact.

Tariffs inhibit global trade, lower growth for exporters, and weigh on public finances for all parties involved. They are likely to raise inflation in the United States, forcing the Fed to act with tighter monetary policy.

Thus, the U.S. economic policy will now be more pro-inflationary than it was before.

The International Monetary Fund has already characterized global growth as weak, with most nations producing "feeble" expansion. A further hit to global trade is likely to present a downside risk to its 3.2% GDP growth projection for next year.

Companies mostly pass import costs onto the customer, so tariffs are likely to be inflationary for U.S. buyers, forcing the Fed to keep interest rates high for longer or to even reverse course and hike borrowing costs once again.

High Fed rates and lower borrowing costs in other countries would also boost the dollar, as evidenced by the 1.5% drop in the value of the euro and the yen overnight, dealing even more pain to emerging markets since over 60% of international debt is denominated in dollars.

Many of the upcoming changes are widely debated among experts, but they agree on some things. Restrictions on Chinese exports could significantly reduce China's demand for oil due to lower production activity, potentially leading to a significant decline in oil prices, including Brent.

From the technical point of view, the graphical pattern on the weekly timeframe signals potential Brent price weakening.

The final recommendation is to sell Brent.

The profit could be fixed at the level of 55.0. The Stop loss could be placed at 85.0.

The volume of the opened position should be set so that the value of a possible loss, defined with a protective stop order, doesn’t exceed 1% of your deposit.