Brent rose for the second day in a row due to escalating hostilities between the United States and Iran that have closed the strategic Strait of Hormuz and raised concerns about prolonged supply disruptions that could send new shock waves towards already weak Western economies.
Oil prices reached new highs in more than a month on Tuesday and are yet to show signs of exhaustion, as the deteriorating geopolitical situation continues to fuel bulls.
The technical picture on the daily chart also improved significantly with positive momentum strengthening, and the price broke and closed above the 200DMA ($78.53) and the $80 psychological barrier on Monday, with Tuesday’s extension putting pressure higher on the net pivot barriers at $88.87 (Fibo38.2% of $119.18/$70.13) and the $90 psychological barrier.
The 5/200DMA golden cross formation and the 10/20DMA bullish cross are strengthening the structure in the near term, as the bulls look to break above $88.87/$90 to open the way for further advance and validation of the reversal pattern.
Partial profit-taking cannot be ruled out after a strong rally in the coming session and the bulls are likely to face increasing headwinds approaching the $90 area, although, in the current environment, dips should be shallow and position setting for further advance.
Potential corrective actions should be contained above the $82.00 area to provide better levels to re-enter the bull market.
Accuracy: 88.00; 88.87; 90.00; 91.30
sip: 85.80; 84.10; 83.70; 82.80
