The bullish momentum in crude oil has been slowly picking up after The New
York Times reported that the US and Israeli militaries had developed plans for
renewed strikes on Iran following the US midterm elections, with additional
forces expected to be fully deployed by early November.
The Saudi-Houthi conflict, meanwhile, continues with the Houthis recently
targeting Saudi airports and energy infrastructure, including a reported strike
near Dammam that killed two people and injured eight. Saudi Aramco instructed
staff to evacuate its Dhahran headquarters and work remotely following the
latest security incidents.
The attacks in the Strait of Hormuz have intensified recently after Iran
said in early October that it would close illegal routes used by the US to escort
vessels through the strait. The IRGC claimed yesterday that it attacked four
vessels and three others struck naval mines. This morning, Iran claimed that
the illicit vessel traffic in Hormuz stopped after the continued attacks.
Looking ahead, crude oil remains supported amid the tensions in the Middle
East and the prospects of another US attack against Iran after the midterms.
Unless we get a de-escalation in the Saudi-Houthi conflict or a surprising
breakthrough in US-Iran negotiations, oil prices will likely continue to rise.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil(CFD contract) is slowly
edging higher as prospects of another US attack on Iran is increasing the risk
premium. If we get a pullback into the 96.77 zone, we can expect the buyers to
step in, with a defined risk below the level, to keep targeting the 110.00
resistance. If the price gets there, we can expect the sellers to step in, with
a defined risk above the resistance, to position for a drop back into the lower
bound of the channel.
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 and the 96.77 level to target a deeper pullback into the lower
bound of the channel. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Todaywe
conclude the week with the US Flash PMIs, but the focus will remain on the
Middle East developments.
This article was written by Giuseppe Dellamotta at investinglive.com.