Medium term
Trade view / 28 June 2016 at 10:48 GMT

Brent a buy after hitting channel support?

Technical Analyst / FuturesTechs
United Kingdom
Price target:
Market price:

Brent crude reached $52.80/barrel at the start of the month but has since seen a pullback. The low last week was 46.94/b and yesterday another test of this support level found buyers, but the thing that interested me more was yesterday's hold of the bottom line of a channel that I've had on my daily chart for a while now. 

This says to me that buyers are returning and it could be time to get long.

Management and risk description

The potential reward on this trade is circa $4-5 on half and $12-13 on the balance if we can reach the 60.95 retracement target, so approx $8-9 "net" profit potential. 

Stop placement in these markets is always tough so we'll start with a stop below 46.50 (so reward/risk is still a very good 8-9 to 1) but look to move it soonest, referencing the rising channel support line for such action.


Entry: buy half here (currently 47.90/b) and half on a dip to 47.35/b or a move through 48.30/b.

Stop: below 46.50/b initially

Targets: 52.80 and 60.90/b.

Time horizon: one week to two months.

Daily bar chart showing the channel I'm tracking; buyers returned here yesterday:
Brent Daily

Weekly candlestick. Recent candles have been small, "Doji"-like 
candles but the bears haven't really got going to confirm a top:
Brent Weekly

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— Edited by Michael McKenna

For more on commodities click here.

Non-independent investment research disclaimer applies. Read more


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