FUNDAMENTAL OVERVIEW
Last Thursday, Trump spoke to the press about different topics following the meetings in Davos at the World Economic Forum. The comment that caught oil traders' attention was him saying that a "massive armada" was heading in the direction of Iran. Oil prices started to rise on potential hedges into the weekend risk.
The risk of an escalation will likely keep oil prices underpinned for the time being, so we might just get stuck in a long consolidation. On the macro side, the Fed's dovish reaction function and the possibility of further improvement in the US labour market data will likely keep supporting the market.
OIL TECHNICAL ANALYSIS - DAILY TIMEFRAME
On the daily chart, we can see that the price eventually bounced on the support zone around the 58.80 level as the buyers stepped in with a defined risk below the support to position for a rally into the 66.00 handle. The sellers will need the price to break below the support to invalidate the bullish setup and extend the drop into the 55.00 handle next.
OIL TECHNICAL ANALYSIS - 1 HOUR TIMEFRAME
On the 1 hour chart, we can see that we have an upward trendline defining the bullish momentum on this timeframe. The buyers will likely continue to lean on the trendline to keep pushing into new highs, while the sellers will look for a break lower to pile in for a drop back into the 58.80 support.
