FundamentalOverview

Crude oil rallied stronglyon Tuesday following the first news of an imminent missileattack from Iran against Israel. We had also the USISM Manufacturing PMI release with the new orders index ticking higher in apotentially first sign of an improvement in demand.

Yesterday, crude oilextended the gains as we got the news that Israel could target Iran’s oil infrastructurein a potential retaliation. That also triggered a breakout of a key resistancewhich increased the bullish momentum.

In the big picture, centralbank easing generally leads the manufacturing cycle, so we can expect globalgrowth to pick up, especially after the Fed’s 50 bps cut and the Chineseofficials surprising with strong easing measures.

All these reasons should bebullish for the market and support prices in the next months barring arecession. As a reminder, the positioning in crude oil is at record lows andthe sentiment is still very bearish. These factors can generally offer greatcontrarian opportunities when we get to an inflection point in thefundamentals.

Crude OilTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that crude oil finally broke above the key 71.67 resistance and extended the rally into the majortrendlinewhere we can also find the 61.8% Fibonacciretracement level for confluence.

This is where we can expectthe sellers to step in with a defined risk above the trendline to position fora drop back into the 71.67 level, while the buyers will want to see the pricebreaking higher to increase the bullish bets into the 80.00 handle.

Crude Oil TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that we have now a minor upward trendline defining the current bullishmomentum. If the price were to pull back, we can expect the buyers to lean onthe trendline to position for new highs, while the sellers will look for abreak lower to increase the bearish bets into the 65.00 handle.

Crude Oil TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee more clearly the recent price action with the major spikes higher triggeredby the Israel and Iran tensions. There’s not much else we can add here as the buyerswill look for a bounce around the trendline or a break above the 75 handle,while the sellers will want to see a stronger rejection and a break below theminor upward trendline. The red lines define the average daily range for today.

UpcomingCatalysts

Today we conclude the week with the US NFP report where the consensus sees140K jobs added and the unemployment rate to remain unchanged at 4.2%.