FUNDAMENTAL
OVERVIEW
The surprising US-Iran breakthrough last Thursday triggered a selloff in crude
oil as traders started to unwind the hedges and positioned for lower prices on
expectations of resumption of normal traffic in the Strait of Hormuz in the
coming months.
As mentioned last week, the downside was more likely as the upside was
capped by the risk of Fed tightening into a negative supply shock and
potentially triggering a recession or Trump caving in and making a deal.
We got the second scenario which is certainly better for the global economy.
The natural target now should be the pre-war levels around the 70.00 handle,
all else being equal.
The risks in the short-term is that things between the US and Iran break down
and the Strait of Hormuz remains closed, so traders will have to keep a close eye
on that.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude is approaching the key 78.00 support zone. This is where we can
expect the buyers to step in with a defined risk below the support to position
for a rally back into the upper bound of the range around the 115.00 level. The
sellers, on the other hand, will look for a break to increase the bearish bets
into the pre-war gap around the 68.00 handle.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have
a downward trendline defining the bearish momentum. If we were to get a
pullback into the trendline, we can expect the sellers to lean on it with a
defined risk above it to keep pushing into new lows. The buyers, on the other
hand, will look for a break to increase the bullish bets into new highs.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we
have another minor trendline defining the bearish momentum on this timeframe. If
we get a pullback into the gap, we can expect the sellers to step in to target
a break below the 78.00 support and extend the drop into the 68.00 handle next.
The buyers, on the other hand, will look for a break higher to increase the
bullish bets into the next trendline around the 90.00 handle. On Thursday, we get the latest US Jobless Claims figures
