Oil prices last week surged quickly as the Israel attack against Iran’s nuclear sites triggered supply fears and an increase in the geopolitical risk premium. The market eventually consolidated around the highs as traders started to look towards de-escalation as it generally happened in the past.
In fact, even if
Israel and Iran continue to launch missiles at each other, the whole thing is
already fading in the back because from a market perspective, as
long as the supply of oil is not impaired, the war can go on without any
meaningful macro impact. More news on de-escalation could see more downside for oil in the short-term as profit taking ensues.
On the daily chart, we can see the parabolic rally following the rumors of impending Israel attack against Iran and eventually the actual attack. The price rejected twice a major trendline where the sellers stepped in to fade the geopolitical fears. The buyers will need a break above the trendline to start targeting new highs with the 80.69 level as the first target. A break below the 72.00 support, could see the sellers increasing the bearish bets into the 65.00 level next.
On the 1 hour chart, we can see that we have created a range between the 72.00 support and the 77.00 resistance. The market participants will continue to play the range until we get a breakout on either side
