On Friday, we cautioned that Monday’s trading might be turbulent — though few anticipated moves of this magnitude. Over the weekend, tensions intensified dramatically after Israel and the United States carried out extensive strikes on Iranian targets, with reports claiming that Supreme Leader Ali Khamenei was killed in the operation. In retaliation, Iran launched missiles and drones targeting Israel, Saudi Arabia, and other locations.
Markets had partially priced in geopolitical risks, yet the response was dramatic:
→ Gold (XAU/USD): surged above $5,400 per ounce as investors sought safe havens.
→ US Dollar Index (DXY): strengthened, supported by both safe-haven demand and concerns over rising global inflation due to energy price pressures.
→ Equities: opened lower, with airlines and tech hardest hit, while defence stocks outperformed.
→ Oil: showed the strongest reaction, reflecting the heightened geopolitical risk premium.
Shipping in the Strait of Hormuz, which handles around 20% of global oil supply, remains severely disrupted. Prices on the XTI/USD chart are swinging sharply as traders reassess fair value under extraordinary conditions.
Technical Overview: XTI/USD
An ascending channel drawn three days ago remains relevant:
→ The channel’s upper boundary acted as resistance at Monday’s open.
→ Its median line provided upward support.
Bearish view:
→ After the bullish gap, prices briefly faltered and retraced sharply.
→ The $73 round figure has emerged as resistance.
Bullish view:
→ The channel’s median now serves as support.
→ The $70 psychological level underpins buyers.
WTI is likely to remain highly volatile between $70 and $73, with price movements largely shaped by geopolitical developments in the Middle East.
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