Oil prices jump as US and Iran exchange strikes; prolonged stalemate keeps the downside limited

FUNDAMENTAL OVERVIEW Crude oil gapped higher today after the US struck Iran's Larak Island on Sunday, the first strikes in over a month, as the IRGC forces were observed preparing to launch rockets with sea mines into the Strait of Hormuz.Iran retaliated launching ballistic and anti-ship missiles from multiple provinces and struck two US bases in Jordan, King Hussein and Al Azraq. A US source said most missiles were intercepted with no significant impact.The geopolitical risk premium increased a bit lifting oil prices, but it looks like the usual skirmish that the market might forget quickly. There’s no appetite for further military operations, as the US is now pursuing an economic warfare to force Iran into a deal. This should limit the downside in oil prices, but overall, the price action might remain mostly rangebound as the diplomatic attempts continue to trigger selloffs.  CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn the daily chart, we can see that crude oil is approaching again the 86.90 resistance. That’s where we can expect the sellers to step in with a defined risk above the resistance to position for a drop back into the 78.00 support. The buyers, on the other hand, will look for a break to increase the bullish bets into the 93.50 level next.CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we have a minor upward trendline defining the bullish momentum on this timeframe. If we get a pullback to fill the gap, the buyers will likely lean on the trendline with a defined risk below it to keep pushing into new highs. The sellers, on the other hand, will look for a break to pile in for a drop into the 78.00 support next.CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, there’s not much we can add here as from a risk management perspective, the buyers will have a better risk to reward setup around the trendline, while the sellers will likely wait for the price to come into the 86.90 resistance or break below the trendline. The red lines define the average daily range for today. UPCOMING CATALYSTSTomorrow, we have the US ISM Manufacturing PMI and the US Job Openings data. On Wednesday, we get the US ADP report. On Thursday, we have Fed’s Waller, the US Jobless Claims and the US ISM Services PMI. On Friday, we conclude the week with the US NFP report. Key US-Iran developments will continue to drive the price action. This article was written by Giuseppe Dellamotta at investinglive.com.