Figure 1: Crude Oil (NYCL) Daily Chart
Tension between the US and Iran soared early this week after oil tankers were attacked in the Gulf of Oman. While the US accuses Iran for being responsible for the attack, Iran’s officials denied any involvement. To add to this tension, an unpiloted US drone was also shot down by Iranian military recently. As a consequence, crude oil prices shot up from the weekly low of 51.70 to 57.50, breaking the previous downtrend. ADX has made a turn whilst being well above the 25 level, signaling a change in trend. Although Donald Trump has pulled back from conflict with Iran at the moment, political risks and uncertainty will likely continue to escalate, especially since Washington has decided to deploy further troops and military hardware/aircraft. Crude oil prices will continue to be volatile in the coming weeks. Looking forward, if crude oil prices decisively break the 59.3 resistance (identified by the Fibonacci levels), it will henceforth approach 63.30.