Introduction
Crude oil has started to cool off after the sharp rally that pushed prices back above $100. In the previous analysis, the focus was on whether buyers could reclaim control after the strong rebound from support. They did, at least temporarily, but the market is now running into the same problem that has capped price several times over the past two months: heavy resistance near the highs.
The rally back toward the upper resistance zone around $108–110 showed that Middle East risk is still very much influencing this market. Concerns around the conflict remain elevated, particularly after renewed tensions involving shipping routes and reports of supply disruptions tied to regional instability. Even when there are no direct outages, the market continues to react to the possibility that escalation could tighten global supply quickly. That fear premium has not disappeared, which is one reason crude prices have remained higher despite recent pullbacks.
At the same time, price action over the last several sessions has become noticeably less aggressive. Instead of the impulsive move higher that carried oil through March and April, the market is now producing smaller candles and struggling to sustain momentum once rallies approach resistance. The rejection from the highs earlier this week reinforces that idea. Buyers are still present, but they no longer have the same urgency that drove the initial breakout phase.
Structurally, though, the market has not fully broken down. The most important development here is that crude continues to hold above the major support zone between $84–88, which has acted as the foundation for the entire rally. The 50-day moving average is also catching up underneath price, giving the market additional support if volatility continues.
Important Levels
- Major resistance: $108–110
- Current support zone: $84–88
- 50-day moving average: Near $91–92
- Longer-term support: $69–70
As long as crude continues holding above the 50-day moving average, the broader structure still favors buyers. A clean break back above resistance could reopen the path toward another leg higher.
If support starts to fail, however, the market could retrace further, especially after such an extended run.
Scenarios and Probabilities
| Scenario | Description | Estimated Probability |
|---|---|---|
| Consolidation | Trades between $88 and $108 while momentum resets | 45% |
| Bullish Breakout | Break above $110 leads to another expansion higher | 35% |
| Deeper Pullback | Loss of support sends price back toward low $80s | 20% |
Possible Trades
Long setups still make the most sense near support and bounce off the 50-day MA. Chasing strength near the highs becomes harder when momentum is fading, and rejection candles begin appearing more frequently.
For shorts, the cleaner setup would come from a confirmed breakdown below support.
Final Takeaway
The case continues with Crude Oil still being affected by the developments in the middle east. Technicals are starting to play a bigger role now, however, so placing trades around support and resistance levels has a higher chance of success than a few weeks ago when the war had just started.
Traders should keep an eye on the developments as any changes could affect the price drastically.
This analysis is provided for educational and informational purposes only and should not be considered financial or trading advice. Trading futures, forex, and other leveraged financial instruments carries a high level of risk and may not be suitable for all investors. Past performance is not indicative of future results. Before making any trading decisions, conduct your own research, assess your risk tolerance, and consult with a qualified financial advisor if necessary.
