At the opening of today's trading session, Brent prices returned to the previously broken resistance level of $67.0 per barrel. Now the price is about to make an opposite technical move—namely, to retest the $75.5 level.
The likely reason for such a sharp decline in oil prices was a significant overhang of buy orders driven by heightened risks of escalation in the Middle East conflict. The fundamental trigger for the drop was Trump’s statement that Israel and Iran had fully agreed to a ceasefire, adding that Iran would be the first to do so, followed by Israel in 12 hours. If both sides fulfill this condition, the 12-day conflict will officially end within 24 hours. Going forward, the extent to which Israel and Iran adhere to the newly announced ceasefire terms will play a key role in determining oil price dynamics.
Assuming the technical inevitability of the price returning to 75.5, some event is expected to trigger a rally in Brent crude. Moreover, this event may not necessarily be tied to the Middle East situation.
The first upside target would be the previous local low of 69.8. Then the price could enter an extended consolidation phase, with the ultimate objective being a breakout above the 75.5 resistance level. The last time a similar chart pattern played out, it took two and a half months of range-bound trading before the price reached its target.
The overall recommendation is to buy Brent crude.
Profits should be taken at the level of 75.5. A Stop loss could be set at the level of 60.0.
The volume of the opened position should be set in such a way that the potential loss (protected by the Stop loss) is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
