Chart Of The Day: Brent Vaults Past $100, On Path To $125

Brent crude, the global oil benchmark, surged past the $100 a barrel key level earlier today, for the first time since 2014, as Russia attacked Ukraine earlier this morning and energy commodity prices jumped. 

Energy commodity traders fear this aggression will be met by harsher US and EU sanctions going forward, which could provoke Russia to stop sending gas to Europe. Russia is the world's second-largest oil producer, producing a third of the globe's supplies, though it sells its output primarily to Europe. Some analysts point out, however, that this current panic could be misguided.

Nonetheless, currently, geopolitical jitters are driving not just uncertainty sentiment spikes, but also energy prices higher.

Brent Weekly

The recent regional tempest sent prices above the resistance of the October 2018 peak, below which the price struggled, forming an Ascending Wedge. This pattern demonstrates that demand was not enough to keep the lows in place despite the higher highs.

Therefore, a rising wedge is bearish. It also makes sense that it would develop at the 2018 peak. Nevertheless, geopolitics blew out the pattern as traders reversed their positions.

This upward momentum is expected to force more investors to readjust their portfolios, creating a chain reaction that pushes prices higher still. Also, during the Ascending Wedge's development, in September, 2021, the 50 WMA crossed above the 200 WMA for the first time in four years, triggering a weekly Golden Cross.

Via the bigger picture, the upward trajectory appears even more secure.

Brent Monthly 2019-2022

The current wedge allowed Brent to cut through the falling downtrend since the 2018 breakdown which was the top of a falling channel. This technical event is significant enough to boost the price to test the 2012 highs of $125.

Trading Strategies

Conservative traders should wait for the price to fall back to the Ascending Wedge, then find support before risking a long position at this juncture.

Moderate traders would also wait for a pullback so they could enter closer to the support to reduce exposure.

Aggressive traders could go long now, but according to a trading plan that addresses their timing, budget, and risk aversion. Here is an example to showcase the basic points of a coherent plan:

Trade Sample – Long Position

• Entry: $100
• Stop-Loss $95
• Risk: $5
• Target: $125
• Reward: $25
• Risk-Reward Ratio: 1:5