How Will Middle East Tensions Shape Today’s Market?

The charts today present a tale of a once buoyant close to the previous week on many indices, with a particularly compelling ascent noted on the NASDAQ and DAX, now threatened by a bearish gap as we commence our trading week. It’s imperative to tread lightly, as the affirmations or denials of signals from Friday hang in the balance. Early assumptions risk premature conclusions, given that we’re currently navigating through low liquidity. Therefore, waiting for European traders to fully immerse themselves in the fray is key before further assumptions are solidified.

Casting our gaze over to the American dollar, a resurgence is evident, and predictably, the Swiss Franc and Japanese Yen are basking in gains. Notably, the GBPCHF is embroiled in a lengthy sideways trend. The strife in the Middle East, however, gives wings to the Swiss franc, causing the pair to recede and lay siege to an absolutely pivotal horizontal support at 1.11. A breach here could unfurl a long-term sell signal, a crucial narrative to monitor as developments unfold.

Swinging our attention toward commodities, precious metals, in their quintessential role as safe havens, are basking in bullish gaps, though it’s noteworthy that the seeds of this were sown in the positive candle from Friday, hinting at budding bullish possibilities even then. Now, fundamentals and technicals entwine, with gold redirecting its path toward the $1,900 resistance and silver setting its sights on the $22.2 per ounce resistance.

Oil, naturally, is not immune to the aftershocks emanating from the Middle East. Traditionally, and currently, palpitations in this region drive oil prices upwards. Despite last week presenting a rather negative canvas for oil, we’re now greeted with a bullish gap. WTI has staunchly defended its $84 per barrel support, and Brent is engaged in an effort to claw its way back above the $89 per barrel resistance.