After the spike following the first Israel attack against Iran, the market got stuck in a range as traders focused on the eventual de-escalation as it happened many times in the past. Despite the US strikes on Iran's nuclear sites over the weekend, the market erased the positive opening gap and continues to trade around the same levels reached after the first Israel's strike.
The market is clearly still betting on de-escalation and assigns low probability of a closure of the Strait of Hormuz. In fact, the conflict per se is not that much of an issue for the market as long as it doesn't impair oil supply. Traders are just monitoring the situation in the Strait of Hormuz now. We could stay in this range for much longer until we either get some clear de-escalation or Iran disrupts oil exports in the Strait.
On the daily chart, we can see that the price couldn't break above the major trendline and eventually filled the opening gap. The price continues to trade between the 72.00 support and the 78.00 resistance. We will likely continue to range here until we get stronger signals of a de-escalation or disruptions in the Strait of Hormuz.
On the 1 hour chart, we can see more clearly the rangebound price action with the buyers stepping in around the 72.00 zone to keep targeting new highs. The sellers will need the price to break below this zone to pile in for a deeper pullback into the 65.00 level next.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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