Expectations that the Federal Reserve will cut interest rates in September have spurred business appetite to buy commodities like Brent crude. Lower rates are set to reduce production costs and boost output, thus creating additional demand for raw materials. On top of that, when monetary policy is more relaxed, it typically backs off the greenback and makes the price of dollar-denominated goods go up.
Looking at the Brent chart, it appears that a reversal pattern has been taking shape since the onset of August, suggesting the possibility of further gains. If the price breaks out and goes above the resistance zone at $67.5, it could pave the way for a rise toward $71.0. This target aligns with untested local lows from the head-and-shoulders pattern formed in late July. A confirmed breakout above $67.75 would be the perfect time to buy this grade.
From a macroeconomic perspective, the upward move may be supported by Wednesday's US oil inventory report. Continued drawdowns in crude inventories could be the catalyst for an upward breakout.
The overall recommendation is to buy Brent crude from the $67.75 level. Profits should be taken at $71.0. Stop loss is set at $65.0.
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.
