Short Brent Crude
Brent broke down below a key trendline last week confirming the entry for a short position. Despite the draw in US crude oil inventories indicated by data yesterday, Brent Crude failed to maintain the upward momentum seen just after the announcement and subsequently fell after that.
If you are not already in the short position then this is a good entry level. Market sentiment is very bearish on the commodity at the moment and we expect further downside in the short term. The first key support brent crude might find is around $43.67, however given the height of the break out the full target for taking all profits is just below $40.
We expect that some OPEC members will come out with statements that could possibly push prices higher temporarily in the coming days, but this alone will not be enough to change the current bearish sentiment. Any bounce higher on this downtrend will provide an opportunity to short the commodity once again.
Given the large extent of the downward move, the stop loss should be the prior day’s high. In today’s case the stop loss should be at most $46.63.
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