FUNDAMENTAL
OVERVIEW
Crude oil fell
yesterday after reports of US and Iran discussing a phased deal to reopen the Strait
of Hormuz and end the US blockade. Iran has put an offer on the table, promising to
reopen the Strait of Hormuz within seven days if the US meets its terms. Iran’s
Foreign Minister Araghchi is staying in New York over the weekend to await a US
response.
It goes without
saying that a breakthrough in negotiations would send oil prices quickly lower,
while a prolonged stalemate or even a re-escalation should keep the market
supported into new highs.
Keep in mind that Trump is facing many constraints at
the moment, so an end to the war is more likely than not. The only question is
the timeline and that’s what’s been driving the price action recently.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil(CFD contract) pulled back to
the major 93.00 zone on renewed hopes for a US-Iran deal. The buyers will
likely pile in around these levels with a defined risk below the zone to
position for a rally into the 110.00 resistance. The sellers, on the other
hand, will look for short positions below the 93.00 zone to target a drop into
the lower bound of the channel around the 85.00 handle.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can
see more clearly the price action around the 93.00 zone which might get
choppier as we head into the weekend due to gap risks. Again, the buyers will likely
step in around these levels to target new highs, while the sellers will look for
short positions below the zone to keep pushing into new lows.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can
see the price broke below the minor upward trendline that was defining the bullish
momentum. If the price pulls back to retest the trendline, we can expect the
sellers to step in with a defined risk above the trendline to position for a drop
into the 85.00 level. The buyers, on the other hand, will want to see the price
rising back above the trendline to increase the bullish bets into the 110.00
level next. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we don’t have anything
on the agenda, but traders will keep a close eye on US-Iran developments after
yesterday’s proposal of reopening the Strait of Hormuz under certain
conditions.
This article was written by Giuseppe Dellamotta at investinglive.com.