Maintaining position on Brent with target at $68.50

Brent crude continues its corrective downward movement following a successful breakout below the $68–69 resistance zone. Notably, this breakdown was accompanied by a decisive breach of the previous local high at $75.50 per barrel established in April. Prices have failed to sustainably recover above this level even amid heightened Middle East geopolitical tensions. Probably, traders anticipate no further escalation, that is why Brent may enter a flat between $75.50 and $68.50 per barrel. However, with the technical correction target of $68.50 remaining untested yesterday, the market retains downward momentum to eventually challenge this support level.

Additionally, weak data on industrial output and fixed-asset investment in China was released yesterday. Industrial production in May (year-over-year) declined by 0.3% and amounted to 5.8%. The April reading stood at 6.1%, while forecasts expected 5.9%. Fixed-asset investment has been falling for the third consecutive month, indicating a lack of investor confidence in China's economic recovery. A similar trend is observed in the US, where yesterday's manufacturing activity index dropped to -16.0. The previous reading was -9.2, while forecasts anticipated an improvement to -5.9. Thus, the actual figure turned out nearly three times worse than expected.

Weak industrial activity is negatively impacting energy demand, putting downward pressure on oil prices, including Brent crude.

The overall recommendation is to sell Brent.

Profits should be taken at the level of 68.5. A Stop loss could be set at the level of 85.0.

The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.