Oil rallies as War Premium returns: WTI retests end-January $66 highs

• Oil breaks higher during overnight trading as pressure mounts ahead of the weekend
• WTI attempts a retest of its January highs with tensions not easing
• Exploring an in-depth Technical Analysis of the commodity

Betting on geopolitical events is an odd task in Markets.

Without discussing the moral aspect (traders have to make money, or at least try to, no matter what), trading live events come with significant potential risk.

Participants build up anxiety, heavy positioning, and costly conviction ahead of uncertain outcomes – this is the War Risk Premium, and it is not a cheap one.

Sometimes it pays, as was observed during last Summer with the 12-Day War, which took WTI to $78.43 highs in a matter of a week.

However, many times, similarly to what happened already on a few occasions in the current rise, Oil may just shoot higher before giving up in exhaustion as nothing official happens.

Will prices tumble again? Who knows.

Tensions really are rising, and the military armada amassed in the Middle East is already higher than the one seen in 2003 before the Iraq War, so there is a basis for fear. The Trump Admin also sounded a bit more aggressive in their speeches yesterday. Let's see how it plays out.

Being positioned is a good way to gain exposure to potential volatility; however, it remains very tricky. A good entry point is essential, and the most important thing is to make sure you respect your rules and risk to trade for longer.

Polymarket-based odds for a strike before February 28 remain below 30%. Given the amount of insider trading on this platform, the attack may still have time before it happens.

Odds for an end-March strike rose accordingly on Tuesday, right after Oil tumbled to $62, and are currently holding around 60%.

WTI is trading as if something were to happen this weekend. So overall, that is a lot of speculation, and the timing is tricky to predict.

In the meantime, let's dive into a multi-timeframe analysis of WTI (US) Oil to determine levels of interest and put the odds in the trader's favor to capitalize on the issue.

Read More:

• January FOMC Minutes and Wartime – North American Mid-Week Market update
• The Battle for 155: Hawkish FOMC minutes fuel USD/JPY breakout hopes
• Markets Today: FTSE 100 down 100-odd points, Gold hovers at $5000/oz, AliBaBa, Walmart Earnings and US data ahead

WTI just retested its January 29 highs, slightly breaking above, but as long as no candle closes above, at least on the 1H timeframe, it is difficult to assume that a breakout is unrolling.

Overall, the Daily picture helps to assess where the action currently stands.

Oil remains strongly above its 200-Day Moving Average, which acts as key barometer for the risk-premium and should stay above there (+/- $0.50) for the time being.

• A progressive build up could test the $67.50 to $68 resistance, the next main stop but that would happen only if anxiety continues to remain high while nothing happens.
• If an offensive occurs, expect $70 to break swiftly and head between $75 to $80.
• With no news this weekend, the action could easily retest the 200-Day MA ($62.83) which is the most optimal point of entry to capture the risk-premium
  • Any daily close below $61 means that traders are unrolling their positions.

The immediate action looks very tricky!

RSI is at overbought levels, but the profit-taking which just occurred quickly got faded higher – the 4H Candle is forming a bullish Hammer (closing in 2h). Hence, positioning looks to be amassing once again.

We will see further details on the 1H timeframe but it seems that if nothing happens, a small retracement looks plausible and could offer decent pullback entries.

• The Bullish Channel formation points to $69 in the event of progressive rallies.

WTI Technical Levels

Levels to place on your WTI charts:

Resistance Levels

• $66.67 session Highs
• Past Week Resistance $65.50 to $66.50
• September 2025 Major resistance $67.50 to $68
• Psychological Resistance $70
• $78.43 12-Day War highs

Support Levels

• 1H 50 and 200-Period MA $64.00
• $65 psychological level micro-support
• Range Key Pivot/Support $62.30 to $63.40 (Iran Premium lows and 200-Day MA)
• 4H 200-period MA $61.65
• May Range lows support $59 to $60.5 Major support
• Iran Support area $58.50 to $59

Oil is now hanging tight at its end-January Spike levels, but the tricky part is the overbought RSI levels which could easily point to a correction.

Aggressive pullback entries could take place at 2 levels:

• The $65 psychological level would be very aggressive – Bulls are not letting this go and points to higher odds of an immediate intervention (over the weekend)
• $64 is the less-aggressive but still very strong corrective level that would allow the most anxious traders to be part of the action
• If nothing happens, look for a retest of the key pivot zone $62.00 to $63.40

Safe Trades and a successful week!

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