Trade of the week: long Brent crude oil

(AI video summary)

Current trade overview: long position 

In the current market environment, a trading opportunity has been identified with Brent crude oil following recent technical developments. The strategy involves taking a long position based on a breakout above minor resistance levels and improving momentum indicators on the daily timeframe.

Trade setup

• Entry point: long Brent crude oil at current market levels
• Stop loss: positioned below the low seen on Wednesday 4 June at $64.13. For traders seeking a wider stop loss, an alternative level below the late May low could be considered to provide additional breathing room
• Target: aim for an upside target of approximately $73, which would represent a test of the upper boundary of the resistance area

Risk-reward ratio

This trade setup offers a favourable risk-reward ratio, particularly when using the tighter stop loss level. The potential move to the $73 target area would provide substantial upside from current levels, while the defined stop loss limits downside risk.

However, traders should be aware that the tighter stop loss option increases the likelihood of being stopped out on temporary market volatility. Those preferring a more conservative approach may consider the wider stop loss placement, albeit with reduced position sizing to maintain appropriate risk management.

Market context

Brent crude oil has been trading sideways for much of May 2025, displaying what appears to be corrective price action. However, recent price movement suggests this consolidation phase may be coming to an end. The commodity has been testing resistance levels that have capped gains throughout the previous month.

The technical picture improved significantly last week when the oil price managed to break through short-term resistance. Most notably, Friday's session saw Brent crude oil trade above the previous reaction high, indicating a potential shift in market sentiment and suggesting further upside momentum may be building.