Crude oil broke below the lower bound of the channel yesterday and extended
the selloff after the US Vice President Vance blamed the war with Iran for the Republicans’ heavy losses
in the midterm elections.
The selloff started
right when he published the post on X, as it reinforced
market expectations that the Trump administration could seek an off-ramp from
the war rather than escalate military operations.
Keep in mind, though, that Trump can legally continue military
operations against Iran even if Democrats control both the House and the
Senate. So, it’s not that simple to force Trump out of the war now that he has
nothing to lose. But for now, this seems the scenario the market is betting on.
Looking ahead, the focus will remain on US-Iran negotiations. A
breakthrough would increase the bearish momentum significantly and take oil
prices back to pre-war levels relatively quickly. An escalation, on the other
hand, could trigger another rally on a rising risk premium, although there’s
also a chance that it could be short-lived if Trump launches limited strikes
just to save face before exiting the war.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil(CFD contract) broke below
the channel yesterday and extended the losses into the 87.00 handle before
pausing. We can expect the buyers to step in around these levels, with a
defined risk below the 87.00 handle, to position for a rally into the 110.00
resistance. The sellers, on the other hand, will look for a break lower to
increase the bearish bets into the 68.00 support next, with the 80.00 handle as
the first target.
CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have
a downward trendline defining the bearish momentum. If we get a pullback, we
can expect the sellers to lean on the trendline, with a defined risk above it,
to keep targeting new lows. The buyers, on the other hand, will look for a
break higher to increase the bullish bets into the 110.00 resistance next.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here, although a break above the 89.00 handle could increase
the bullish momentum and extend the pullback into the downward trendline. From
a risk management perspective, the buyers have a great risk to reward setup
around these levels to target new highs, while the sellers will need a pullback
to the downward trendline to have a better setup. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Todaywe
get the latest US Jobless Claims figures. Tomorrow, we conclude the week with
the US NFP report and the University of Michigan Consumer sentiment survey. The
focus will remain on US-Iran negotiations.
This article was written by Giuseppe Dellamotta at investinglive.com.