4 min readThe Middle East is in the grip of a major military escalation. On 28 February, the US and Israel launched coordinated strikes on Iran, killing Supreme Leader Ali Khamenei and several senior military officials. Iran retaliated with missile and drone attacks across the region, hitting targets in Israel, the UAE, Saudi Arabia, Qatar, Bahrain, and Oman.
The key development for markets is the Strait of Hormuz, through which roughly 20% of the world’s daily oil supply passes. Tanker traffic has largely frozen, with shipping companies suspending movements and oil tankers already struck by missiles.
Gold has surged past $5,300 on safe-haven demand. Brent crude briefly spiked above $82 before settling around $77, its biggest move in four years. Here are the key technical levels to watch.
Brent crude oil
Brent opened Monday with a massive gap up of over 7% and is now up roughly 30% year-to-date.
We highlighted the $78-$79 resistance zone in yesterday’s analysis, and price is now trading directly into it. Below, $71 remains key support. Above, the next major resistance sits at $85.
With the Middle East situation evolving rapidly, the outlook is highly uncertain:
- Mean reversion traders could view this as an overextended gap that may pull back
- Momentum traders could see this as strong, decisive bullish price action worth following
A sustained break above $79 could open the door toward $85. A failure to hold could see price retrace toward $71.
Gold (XAU/USD)
As we noted in yesterday’s analysis, a gap up on gold appeared likely, and that is exactly what we got. Gold not only gapped up but continued higher, recently breaking above $5,400. Momentum is strongly and decisively bullish.
Price is now entering an immediate resistance zone. If cleared, the all-time highs around $5,600 would be the next potential major resistance above. A rejection here could see price retrace toward the $5,250 immediate support below.
On the 4-hour chart, the $5,230-$5,250 zone stands out as a key area to watch on any pullback. This level aligns with the 0.702 Fibonacci retracement and the 20 EMA, creating a confluence zone. If price does pull back to this area, it could act as a potential reload zone for bulls looking to defend.
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