Geopolitics in the Red Sea
Tensions in the Red Sea continue to rise, with Iran issuing yet another warning to the U.S. and its allies before expanding the war in the rich-oil-producing region. The warning follows the deployment of an Iranian warship in the Red Sea after the withdrawal of the USS Gerald R. Ford supercarrier from the waters earlier this month. In addition to that, it follows an increasing number of attacks from Houthi rebels on commercial and military ships sailing through this popular trade route, which caused major shipping companies to reroute their ships around the Cape of Good Hope, adding additional cost and time to the shipping. To make things worse, in the past few days, there were multiple reports of attacks from Somalian vessels on commercial ships in other parts of the Middle East. Furthermore, there were reports of over 100 attacks on the U.S. forces in Syria and Iraq since mid-October 2023. To sum up these developments, the situation in the region is deteriorating at a fast pace, and the potential eruption of a broader conflict continues to pose a significant threat to falling oil prices.
Technical analysis
Since the start of the year, the USOIL has been mainly trending sideways. The loss of bearish momentum is reflected in a low value of ADX and flattening of RSI, Stochastic, and MACD on the daily chart; the flattening can also be observed on the weekly chart. As a result, we expect the USOIL to keep oscillating between $68 and $75 in the very short term. However, our price target of $65 per barrel stays unchanged.
Illustration 1.01
Illustration 1.01 shows the daily chart of USOIL and simple support/resistance levels derived from peaks and troughs.
Technical analysis
Daily time frame = Neutral
Weekly time frame = Bearish (turning neutral)
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor or any other entity. Your own due diligence is highly advised before entering a trade.
Tensions in the Red Sea continue to rise, with Iran issuing yet another warning to the U.S. and its allies before expanding the war in the rich-oil-producing region. The warning follows the deployment of an Iranian warship in the Red Sea after the withdrawal of the USS Gerald R. Ford supercarrier from the waters earlier this month. In addition to that, it follows an increasing number of attacks from Houthi rebels on commercial and military ships sailing through this popular trade route, which caused major shipping companies to reroute their ships around the Cape of Good Hope, adding additional cost and time to the shipping. To make things worse, in the past few days, there were multiple reports of attacks from Somalian vessels on commercial ships in other parts of the Middle East. Furthermore, there were reports of over 100 attacks on the U.S. forces in Syria and Iraq since mid-October 2023. To sum up these developments, the situation in the region is deteriorating at a fast pace, and the potential eruption of a broader conflict continues to pose a significant threat to falling oil prices.
Technical analysis
Since the start of the year, the USOIL has been mainly trending sideways. The loss of bearish momentum is reflected in a low value of ADX and flattening of RSI, Stochastic, and MACD on the daily chart; the flattening can also be observed on the weekly chart. As a result, we expect the USOIL to keep oscillating between $68 and $75 in the very short term. However, our price target of $65 per barrel stays unchanged.
Illustration 1.01
Technical analysis
Daily time frame = Neutral
Weekly time frame = Bearish (turning neutral)
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor or any other entity. Your own due diligence is highly advised before entering a trade.
We just launched our own website!
