Crude oil rallied strongly on Friday as expectations of US strikes on Iran over
the weekend strengthened. Those fears proved to be wrong and oil prices opened
the week lower.
However, Trump has suggested that strikes could resume after the US midterm
elections. This threat is likely to keep crude oil supported.
Meanwhile, top officials from Saudi Arabia, Turkey and Pakistan are to meet
Iran’s leaders in Tehran today in their first high-level contact since Saudi
Arabia was drawn into war with the Houthis. Reuters sources say the meeting
aims to discuss regional coordination amid escalating Houthi attacks and
US-Iran tensions.
Looking ahead, oil prices will remain supported amid the tensions in the
Middle East and the prospects of another US attack. A de-escalation in the
Saudi-Houthi conflict or a surprising breakthrough in US-Iran negotiations, on
the other hand, should lead to a big correction.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil(CFD contract) is slowly approaching
the resistance zone around the 110.00 level. If the price gets there, we can
expect the sellers to step in, with a defined risk above the level, to position
for a drop back into the lower bound of the channel. The buyers, on the other hand,
will want to see the price breaking higher to increase the bullish bets into
the 117.00 level next.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have
a minor upward trendline defining the bullish momentum. The buyers will likely
continue to lean on the trendline, with a defined risk below it, to keep
pushing into new highs. The sellers, on the other hand, will look for a break
lower to extend the drop into the lower bound of the channel.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here as the buyers will continue to have a better risk to
reward setup around the trendline, while the sellers will need a break below
the trendline to target a deeper pullback into the lower bound of the channel. The
red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrowwe
get the US Consumer Confidence report. On Wednesday, we have the FOMC rate
decision. On Thursday, we get the US GDP report, the US PCE and the latest US
Jobless Claims figures. On Friday, we conclude the week with the US Employment
Cost Index.
This article was written by Giuseppe Dellamotta at investinglive.com.