Oil prices sink as expectations for an imminent US-Iran deal increase. What’s next?
FUNDAMENTAL OVERVIEW
Crude oil sold off hard yesterday following reports that Pakistan's Chief of Army, Asim Munir, was carrying a proposal to Iranian leaders that included the removal of the US naval blockade and gradual lift of sanctions under the Islamabad Memorandum of Understanding.
Even though it wasn’t the first time we got such positive news, markets saw a stronger probability a potential deal due to the fact that US President Trump spoke with Munir ahead of his trip. Moreover, Pakistani officials described the visit as fruitful, with the outcome of the discussions expected to become clearer soon.
The losses then extended later in the day when Russia’s RIA Novosti reported that the US and Iran would announce a new ceasefire agreement in the coming days that would include freedom of shipping via Hormuz.
Finally, the US has started returning its diplomats to Gulf states, suggesting Washington does not expect further military escalation and might just try squeeze Tehran via economic sanctions.
Overall, the outlook for the oil market is more neutral to bearish at this point, even if no deal is announced in the coming days.
CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that crude oil sold off hard yesterday as expectations for an imminent US-Iran deal strengthened. We will likely need an actual deal to see oil prices extending the losses below the key 78.00 support zone.
If the price gets there without a deal, we can expect the buyers to step in with a defined risk below the support to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to pile in for a drop into the 68.00 support next.
CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, the price is rejecting the swing low around the 80.00 handle. The buyers will likely step in here with a defined risk below the level to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to extend the drop into the 78.00 support.
CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have a minor resistance zone around the 83.30 level. After the strong selloff, we might see a pullback on profit-taking into the resistance. If the price gets there, the sellers will likely step in with a defined risk above the resistance to position for a drop into new lows, while the buyers will look for a break to increase the bullish bets into new highs. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we have the US PCE price index. Tomorrow, we get the US Jobless Claims figures. On Friday, we conclude the week with Fed Chair Warsh’s speech at the Jackson Hole Symposium. Traders will continue to focus mostly on US-Iran developments.
This article was written by Giuseppe Dellamotta at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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