Oil is currently in the spotlight after the Trump administration imposed their latest round of sanctions on Iran.
The sanctions fell short of U.S aim of cutting off Iranian oil exports entirely as eight countries were granted temporary waivers which included the likes of China, Japan, Turkey and India. However, the exempt countries agreed to reduce Oil imports dramatically, to zero within weeks.
Iran is expected to feel pain as 60% of the economy is centrally planned around Oil and Gas production. A cut-off in Iranian exports will lead to a rise in Oil supply which could spark a similar sell-off that was seen last week until relations stabilise with U.S and Iran.
On the weekly chart for Crude Oil we can see a strong bearish engulfing candlestick breaking out of a 1000PIP range-play between $65.00 to $75.00 per barrel.
When ranges are placed correctly and breakout to either direction, price has a high probability of fulfilling the duplicated range-lows if bearish or range-highs if bullish.
On the 2HR chart for Oil we can see a much tighter range which is currently being respected, price today moved higher to retest the range-highs but subsequently pared it’s gains and reversed. On slightly higher hourly timeframes such as the 4HR and 8HR, the moving average have come to meet price and this has applied dynamic resistance and confluence to our bearish view.
A strong break of the 2HR range play could renew selling pressure and push Oil prices lower towards $60.00, the next critical support zone.