Brent outlook: Brent Oil price jumps over 4% on fresh escalation of US-Iran conflict

Slobodan Drvenica Windsor Brokers

Brent

Brent price jumped over 4% on Wednesday morning, extending recovery leg from temporary base at $70 zone.

Fresh acceleration was sparked by the latest comment from President Trump that deal with Iran is over, following the latest fire exchange between US and Iran that undermined recent optimism and started to lift oil prices again.

Bounce from psychological $70 support was anticipated, as daily studies were at that time oversold, but instead of limited technical correction, we can expect possible stronger rally as geopolitical factor (the key driver of the oil price until now) gets involved.

Technical picture on daily chart improves after the price rose above 10 and 20DMA’s, broke above the upper boundary line of bear-channel (from $112.70) and cracked 200DMA ($78.44), pressuring next pivotal barriers at $80.00/18 (psychological / Fibo 23.6% of $112.70/$70.13 descend).

Firm break here is needed to generate initial signal of formation of reversal pattern on daily chart that would provide fresh impetus to recovery attempts.

North-heading momentum indicators (14-d momentum is hitting the centreline and RSI heading towards 50 breakpoint) would boost positive outlook if indicators continue to ascend and generate bullish signals.

Near-term action will continue to depend primarily on developments on geopolitical front, with escalation on the ground to further lift the price (although Trump’s rhetoric is not seen as very reliable factor, due to quick changes of direction).

Bullish scenario sees sustained break of 200DMA and $80 zone as a trigger for acceleration towards $86.39 (Fibo 38.2%) and $90 (psychological) in extension.

Conversely, calmer tones from both sides may deflate immediate bulls and keep near-term action in a scenario of limited correction of larger downtrend (return and close within the bear-channel seen as minimum requirement to keep larger bears in play).

Res: 80.00; 80.18; 82.09; 85.29.
Sup: 75.78; 73.11; 72.04; 70.50.

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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