Oil price drops 5% on new peace optimism

Brent oil fell sharply on Monday, driven by fresh way of optimism following talks between Iran and Qatar officials that boosted hopes of possible end of war between US/Israel and Iran.

The news provided strong relief to the markets after the latest tough rhetoric from President Trump, including a massive attacks on Iran that threatened to put the whole region in fire.

Oil was down over 5% at the start of the week, to hit three-week low and generated several bearish signals (break below psychological $100, break of 20DMA and hitting 50% retracement of $95.11/$117.40 upleg).

Today’s drop also completed a bearish failure swing pattern that signals bearish continuation of the bear-leg from $117.43 peak (Oct 26).

Technical picture was also weakened by strong loss of positive momentum (south-heading 14-d momentum is touching the centreline / 5/10DMA bear-cross) that adds to a negative near-term outlook, but partial profit-taking after strong fall should be also anticipated.

Potential upticks should stay below broken Fibo 38.2% (108.89) to keep bears in play and position for further easing.

Bears eye target at $103.62 (Fibo 61.8%), violation of which would unmask key $100 support zone (Fibo 76.4% / psychological / daily Ichimoku cloud top.

Bearish near-term scenario is expected to persist as long as fundamentals remain favorable, while any change in rhetoric (particularly regarding peace talks) would risk quick change in sentiment and inflate oil price.

Res: 106.30; 107.68; 108.90; 110.00
Sup: 105.50; 104.90; 103.64; 102.34