Brent oil price rose around 2% in early Monday trading (on track for the first daily gain after being eight days in red), following fresh escalation in the Middle East (escalation in Lebanon and fresh US attack on Iran and their subsequent response) that soured the sentiment.
Strongly oversold daily studies, following heavy losses in past two weeks (the contract price was down over 16% during this period) also contributed to fresh recovery attempt by prompting traders to collect profits.
Recent strong fall was contained by psychological $90 support, with return into daily Ichimoku cloud (spanned between $93.14 and $99.70) to possibly mark a false break below the cloud that would open space for further recovery.
Although the price action will be highly depending on developments on the ground, another fundamental factor that shows reducing demand for energy, due to weaker economic conditions (China and EU as the most significant), may counter recovery attempts.
Daily studies remain predominantly bearish, with initial resistance at $95.30 (Fibo 23.6% of $112.70/$89.93 bear-leg, reinforced by lower 20-d Bolinger band) being still intact and guarding more significant $98.63 (Fibo 38.2%, reinforced by falling 10DMA) and $99.70/$100 (cloud top / psychological).
These levels should cap extended upticks to keep larger bears in play and mark a healthy correction before bears regain control.
Sustained break through $99.70/$100 would weaken near-term structure and open way for stronger correction.
Res: 95.30; 96.09; 98.63; 99.70
Sup: 92.43; 90.00; 88.73; 86.08
