Crude oil extended the
losses yesterday as hopes for a US-Iran deal strengthened after Iran’s
President said the Supreme Leader had granted the government additional
authority regarding negotiations.
Markets interpreted the news
as a sign of greater flexibility to reach an agreement, as strategic decisions are
always in the hands of the Supreme Leader.
However, oil prices pared
some of the losses after the US struck sites on Iran’s Qeshm Island overnight.
US officials said the strikes were in response to Iran firing at a US aircraft
and did not signal the start of a broader military operation.
Trump said he was not
looking to strike Iran after the midterm elections, although officials
confirmed that all options remain on the table. Meanwhile, Axios reported that
the CIA Director had advised Trump to maintain a “no war, no deal”
approach, allowing economic pressure on Iran to continue.
It goes without saying
that a breakthrough in US-Iran negotiations would trigger a significant selloff
in crude oil on expected supply improvement. A prolonged stalemate, or worse an
escalation after the US elections, should keep oil prices supported.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil (CFD contract) extended the
losses yesterday amid increased US-Iran deal hopes. The price is now
approaching the lower bound of the channel. If the price gets there, we can expect
the buyers to step in, with a defined risk below the channel, to position for a
rally into the 110.00 resistance. The sellers, on the other hand, will want to
see the price breaking lower to increase the bearish bets into the 68.00
support next, with the 87.00 handle as the first target.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can
see the price broke below the minor support zone around the 100.00 level, which
should now turn into a resistance. If the price gets there, we can expect the sellers
to step in, with a defined risk above the resistance, to keep targeting a break
below the channel. The buyers, on the other hand, will look for a break higher
to pile in for a rally into the 110.00 resistance next.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we
have a minor upward trendline defining the current pullback. The buyers will
likely 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 to
increase the bearish bets into the lower bound of the channel. The red lines
define the average daily range for today.
UPCOMING CATALYSTS
Today we have the US Job
Openings data and the US midterm elections, although we will get the first
results early tomorrow. Tomorrow, we have the US ADP and the US ISM Services
PMI. On Thursday, we get the latest US Jobless Claims figures. On Friday, we
conclude the week with the US NFP report and the University of Michigan
Consumer sentiment survey. The focus will remain on US-Iran negotiations.
This article was written by Giuseppe Dellamotta at investinglive.com.
