WTI (Oil) drops back below $100 after US-Iran talks set to resume – Oil Dynamics and Intraday Analysis

• Oil drops below $100 as US-Iran talks are set to resume on Thursday
• After gapping higher to $105 at the globex open, anxiety shot up but the negotiations talks helped a significant correction back to $98.
• Traders have been looking for direction since
• Exploring an in-depth Technical Analysis of the commodity

Energy markets started the week with a violent whip-saw, reminding traders that the geopolitical risk premium is still the ultimate driver of price action.

The weekly session kicked off with a massive spike in anxiety after the initial failure of US-Iran talks around the weekend.

WTI Crude gapped aggressively higher at the Globex open, flashing up to the $105 handle as geopolitical uncertainty quickly set back.

This came particularly prominent from the fact that the Strait of Hormuz did not see any form of improvement in its flows since the truce came in effect last Tuesday.

However, that panic was short-lived.

Sentiment shifted violently on the news that the high-stakes US-Iran diplomatic talks are officially set to resume this Thursday after fears of a potential early end to the two-week ceasefire.

The prospect of renewed negotiations triggered a massive wave of profit-taking and short-selling, dragging the commodity in a significant correction straight back down to the $98 level.

Since that brutal retracement however, the market has hit a wall of indecision, with prices now stuck between $96 and $104 since last Thursday.

Traders are currently sitting on their hands, desperately looking for a clear sense of direction as they await Thursday's closed-door developments.

The fundamental picture is entirely hostage to the headlines, meaning the charts are more important than ever for mapping out risk.

With volatility now stalling, let's explore a few key charts and scenarios for WTI (US) Oil to prepare for potential breakout levels.

Read More:

• US Blockade on Hormuz begins! Wall Street withstands the pressure – Dow Jones and US Stock Market Outlook
• The war premium vs. The yield premium: Which force will seize control and drive Gold’s next move?
• AUD/USD Technical Analysis: Bulls regain control as key psychological level holds

Recent daily candles haven't shown anything but a cloudy picture, with numbers of daily up and down gaps, and hesitation inside candles in between (implying dead momentum).

The RSI is now back right at the 50.00 neutral level, which also corroborates with a more hesitant picture.

A positive for Markets is the fact that WTI Crude has now officially stopped trending higher, at least for now – This is shown by the fact that bulls could not hold the war bull channel after the morning tumble.

But to maintain their high stakes rallies, they will need to see crude persist on the longer run below $100.

With the daily chart not offering such a clear view, let's take a closer look.

It only is the second time since the beginning of the War that WTI breaches its 4H 50-period moving average – A sign of further progress but this still fails to translate into more downside ahead.

Even the intraday charts aren't displaying any type of clear pattern.

When you can't trust individual candlesticks and trendlines, the only technical areas to rely on are supply and resistance levels (Support and resistances).

The $98 to $100 zone acts as a significant magnet for action and will retain this role as long as the situation remains unclear.

• Breaking $98 would point to $93 and form a new range in this area.
• Bouncing above $100 would on the other hand point to $106 and form an upper range in this zone.
  • These levels are expected to remain until a proper peace deal is reached.

WTI Technical Levels:

Resistance Levels

• 4H 50-period MA (~$103.96)
• $106 to $108 June 2022 Resistance
• $110 psychological level
• 2022 and War highs $117 to $120

Support Levels

• $98 to $100 Major Pivot (testing)
• War Support Pivotal $93.00 to $95
• $87 to $90 mini-Support (4H 200-period MA)
• 2025 Highs Key Support $78 to $80
• Pre-War Support $63.80 to $64

Oil is now stuck at the $98 level as traders await for further signals.

A sign of hesitancy that points to more rangebound action ahead is the fact that the RSI is already showing signs of rebounding close to overbought levels.

However, this could only point to a thinner $2 range to $100 as participants are still scrambling for further news.

The action could be stuck for the time being, but one important region to look at is Lebanon, with direct Israel-Lebanon talks supposed to start tomorrow (and will be of great assistance to any peace deal).

Safe Trades!

Follow Elior on Twitter/X for additional Market News, Insights and Interactions @EliorManier