Crude oil extended the
gains into new highs yesterday after the Houthis targeted the Aramco oil
company in widespread wave of missile attacks.
The bullish momentum then
accelerated after the Wall Street Journal reported that in a rare in-person
visit to the White House, the top US commander in the Middle East briefed Trump
on military options for Iran as the US weighed resuming major combat operations.
This is the last weekend
before the US midterm elections, so there’s some concern of a US attack over
the weekend. We might see some hedging going into the weekend that could push
oil prices even higher.
The market remains supported amid the Saudi-Houthi conflict and the possibility of renewed
US strikes. We would need a de-escalation in the Saudi-Houthi conflict or a
surprising breakthrough in US-Iran negotiations to get a significant correction
in oil prices.
Keep also in mind that
the market could take another US attack as an exit strategy, so after the
initial spike we could see traders unwinding bullish bets. But that will depend
on what Trump says after the potential attack and how strong Iran’s retaliation
is going to be.
If we don’t see any
attack this weekend, oil prices could open lower on Monday and what happens
next, will depend on further Middle East developments.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil(CFD contract) extended the
gains into new highs as fears of an imminent US strikes on Iran grew. Technically,
there’s not much we can glean from this timeframe as the most important levels
remain the lower bound of the channel and the resistance around the 110.00
level, so we need to zoom in to see some more details.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have
the upward trendline defining the bullish momentum. The buyers 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 want to see the price breaking lower to
pile in for a correction 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 it
to open the door for new lows. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Todaywe conclude the week with the US Employment Cost Index,
but the focus will remain on the Middle East developments.
This article was written by Giuseppe Dellamotta at investinglive.com.