FUNDAMENTAL
OVERVIEW
Oil prices continue to be skewed to the upside in the
short-term as the renewed US-Iran crisis is keeping the geopolitical risk
elevated, especially heading into the weekend. The traffic in the Strait of
Hormuz is basically back to pre-ceasefire level after the US reimposed the
naval blockade and Iran followed suit.
There is some good news that is keeping hopes for a
quick de-escalation alive and limiting the surge in oil prices. For example,
yesterday the Iranian
top negotiator said that the door for diplomacy was still open despite the
recent escalation. Trump
said on Fox Business that Iran wants to meet and make a deal and that he
would prefer to solve the dispute diplomatically.
Today, on his Truth Social account, Trump announced
the release of an American citizen and added that the United States appreciates
this gesture of goodwill by Iran.
Although this is smoothing out the upside momentum in
crude oil, without a clear de-escalation the downside will remain limited, and
prices might continue to edge higher. Everyone is waiting for the ultimate TACO, but Trump’s pain threshold is likely at higher levels.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil broke above the key resistance zone around the 78.00 level, opening
the door for a move into the next major trendline around the 88.00 handle. We
can expect the buyers to continue to step in around the resistance-turned-support
with a defined risk below it to keep targeting new highs. The sellers, on the
other hand, will want to see the price falling back below the support to pile
in for a drop back into the 68.00 level.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can
see more clearly the consolidation at the support as traders await new
catalysts or technical breakouts to push the price in either direction. If we
get a downside break, we can expect the sellers to extend the drop into the
minor upward trendline around the 75.00 level. If the price gets there, the
buyers will likely lean on the trendline with a defined risk below the trendline
to position for a rally into the 88.00 level next.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can
see the recent consolidation has formed a potential bullish pennant. The price
will need to break to the upside to confirm the pattern. If that happens, the
buyers will likely increase the bullish bets into the next major trendline
around the 88.00 level. The sellers, on the other hand, will need to wait for
the price to fall below the support to open the door for new lows and target a
pullback into the minor upward trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we get the US
Retail Sales and Jobless Claims data. Tomorrow, we conclude the week with the
University of Michigan Consumer Sentiment survey. The market focus remains on US-Iran
headlines.
This article was written by Giuseppe Dellamotta at investinglive.com.
