HiWayFX
Broker Representative
Obama Vows New War in the Middle East: How to Trade It
Thursday, September 11, 2014 - 06:45
The US president today vowed to chase down and neutralise terrorists of the Islamic State insurgency that have captured large parts of Syria and Iraq, marking the first time since the US enters major active military operations since the Iraq and Afghanistan wars. The announcement comes at a crossroads for the oil market which has seen a steep downturn in recent months, largely due to oversupply in the US market. What we are now seeing is the UK Brent Oil CFD at a pivotal support level not seen since May 2013.
Firstly, this pivotal support in the zone of 98.50 is so important because it has served as such for over 3 years, or since January 2011. Only once has the UK Brent CFD broken under this level, only to recover within days. Secondly, there are multiple geopolitical factors that are intersecting to inject extra volatility into the European oil market, namely the war against IS terrorists and also the political tension between Russia (an oil producing state) and Europe (an oil consumer).
It is almost a given that tensions over Iraqi and Syrian oil will erupt during the upcoming war against IS. IS uses oil to finance it's operations and it can just as well use this against Western forces by sabotaging oil refineries or setting oil fields ablaze.
All of these factors would suggest a tighter oil market and higher prices in UK Brent.
Weekly chart of UK Brent Oil CFD
The Trade
The chart above shows weekly candles of the UK Brent CFD market, with a clear support level of 98.50. The one caveat of this analysis is that this support is considered to be quite a wide zone, anywhere between 97 and up to 99. But in order to identify and exploit major market trends, one must allow greater flexibility in spotting and trading them.
So watching the news for any scares to the oil market will be of great benefit in catching any pops in Brent. We would expect this trade to be wrong if prices made a daily close below 96.50 but would like to see targets of 100 initially, followed by 102 further along.
The information provided is for educational purposes only and should not be considered as investment advice.
Thursday, September 11, 2014 - 06:45
The US president today vowed to chase down and neutralise terrorists of the Islamic State insurgency that have captured large parts of Syria and Iraq, marking the first time since the US enters major active military operations since the Iraq and Afghanistan wars. The announcement comes at a crossroads for the oil market which has seen a steep downturn in recent months, largely due to oversupply in the US market. What we are now seeing is the UK Brent Oil CFD at a pivotal support level not seen since May 2013.
Firstly, this pivotal support in the zone of 98.50 is so important because it has served as such for over 3 years, or since January 2011. Only once has the UK Brent CFD broken under this level, only to recover within days. Secondly, there are multiple geopolitical factors that are intersecting to inject extra volatility into the European oil market, namely the war against IS terrorists and also the political tension between Russia (an oil producing state) and Europe (an oil consumer).
It is almost a given that tensions over Iraqi and Syrian oil will erupt during the upcoming war against IS. IS uses oil to finance it's operations and it can just as well use this against Western forces by sabotaging oil refineries or setting oil fields ablaze.
All of these factors would suggest a tighter oil market and higher prices in UK Brent.
Weekly chart of UK Brent Oil CFD
The Trade
The chart above shows weekly candles of the UK Brent CFD market, with a clear support level of 98.50. The one caveat of this analysis is that this support is considered to be quite a wide zone, anywhere between 97 and up to 99. But in order to identify and exploit major market trends, one must allow greater flexibility in spotting and trading them.
So watching the news for any scares to the oil market will be of great benefit in catching any pops in Brent. We would expect this trade to be wrong if prices made a daily close below 96.50 but would like to see targets of 100 initially, followed by 102 further along.
The information provided is for educational purposes only and should not be considered as investment advice.