A shelf pattern is nearing completion near $67.45 on the Brent crude chart. The level has been tested five times at the moment of writing this forecast (marked by the blue rectangle on the chart). Such patterns typically precede breakdowns through the bottom of the figure. A downward move toward the $64.75 target appears probable. However, rather than entering the market at current levels, traders should await a retest of the $71 resistance area before opening a position. This strategy is supported by two key factors.
First, as it was highlighted before, the shelf pattern is nearing completion. So, the price may go up and down several times before breaking through the pattern’s bottom.
Second, opening a sell position at a higher price will provide traders with a better profit-to-risk ratio, since a Stop Loss order should be set at $74.0, which equals 300 pips of loss. If the price moves down to the target level of $64.75, the potential profit would be 925 pips. So, the profit-to-risk ratio exceeds three, which is good. However, if a trader opens a position from the current price ($68.0), the potential loss could reach 600 pips, while the profit would be only 325 pips. The ratio would then be 0.54, and such an entry should be avoided.
The overall recommendation is to sell Brent from $71 per barrel.
Profits should be taken at $64.75. A Stop Loss order could be set at $74.0.
The volume of the 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 doesn’t allow opening a position of this size, it’s 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.
