Oil, Natural Gas, US Dollar Technical Analysis in the Face of Geopolitical Uncertainty

Brent Oil (BCO) prices have continued to surge over the past few days due to an escalating geopolitical crisis in the Middle East. The situation intensified with the potential for Israel to strike Iran in response to the October 1st missile attack. This development has sparked fears of disruptions in oil exports from oil-producing regions. Consequently, Brent oil prices broke above $75, initiating a strong upward surge.

Similarly, natural gas (NG) prices found support in the long-term support region and surged over the past five weeks. Instability in the oil market has also contributed to volatility in natural gas prices. Given the heightened tensions in the Middle East, natural gas prices will likely experience increased volatility.

On the other hand, the US dollar also surged after the stronger-than-expected jobs data and increased tensions in the Middle East. This upward movement pushed the dollar to a seven-week high, reaching a critical resistance area.

Brent Oil (BCO) Technical Analysis

Oil Daily Chart – Double Bottom Pattern

Brent oil has broken through the 50 SMA on the daily chart and continues to surge higher. However, the price still remains below the 200 SMA. The short-term target has now shifted towards $84.42, a level determined by the red trendline extending from the April 2024 high. As geopolitical tensions escalate, Brent oil prices are likely to gain momentum toward this target. Additionally, the RSI is signaling further potential for an advance, as the trend is rising with no signs of exhaustion.

Oil 4-Hour Chart – Breakout from Ascending Channel Pattern

Brent oil has broken the immediate upward channel, highlighted by red trendlines on the 4-hour chart. Short-term momentum is strengthening towards the target of $84.42. The $80.30 level also serves as initial resistance before reaching $84.42. However, an upward continuation in oil prices is likely. As the RSI approaches the overbought level, a short-term correction may develop before the next upside move.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Bearish Hammer

Natural gas has hit strong short-term resistance and declined from the triangle pattern. It formed a bearish hammer candle at Friday’s close. This candle suggests that prices are likely to correct lower. However, the strong rally from the bottom was initiated by a double-bottom pattern. These bottom patterns indicate that natural gas prices may continue higher after the correction.

Moreover, the price remains above 50 and 200 SMAs, which signals an upward trend in the natural gas market. This decline in natural gas is primarily due to overbought market conditions, as indicated by the RSI on the daily chart.

Natural Gas 4-Hour Chart –Upward Trend Supports Price

The 4-hour chart for natural gas indicates that the price is currently in a correction phase. The RSI is approaching the lower levels. This suggests that the price may turn upward once the correction is complete. Strong short-term support is located at $2.60 on 4-hour chart.

US Dollar Technical Analysis

US Dollar Daily – Retest of Triangle Pattern

The US dollar breached the 50 SMA and reached resistance on the daily chart. This resistance lies in the triangle pattern broken in August 2024. This breakout from the triangle triggered a sharp decline in the US dollar. Now, the price is retesting this breakout, and if the dollar fails at this level, the index will likely continue its downward momentum. Unless the index closes above 102.70, the overall daily trend remains bearish. A break above 102.70 would target the next strong resistance at the 200 SMA, located at 103.74.

US Dollar 4-Hour Chart – Short-Term Strength after Falling Wedge Breakout

The 4-hour chart shows that the US dollar has broken out of the falling wedge pattern and continues to move higher. The chart shows that Friday’s upward move hits the resistance on the daily chart. This upward move was developed after the US jobs data release. A break above 102.34 could trigger further upward momentum. However, the daily resistance suggests a potential correction for the US dollar from current levels.