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Middle East conflict: Key S&P 500, WTI, US dollar, EUR/USD, gold and silver levels to watch
Oil prices have surged to nine-month highs following Middle East escalation, whilst equity markets decline and safe-haven assets attract flows amid uncertainty. These are the key technical levels to watch.
Middle East conflict drives oil surge and market volatility as traders assess risks
Despite the market reaction to the outbreak of war in the Middle East has so far been relatively contained, volatility has significantly risen but may rise more if the conflict escalates.
Oil prices surge on supply concerns
The oil price has surged sharply - hitting nine-month highs - but so far remains below the $100 per barrel level many feared, as traders wait to see if shipping through the Strait of Hormuz can continue at lower levels or will be blocked entirely and whether major energy infrastructure will be affected.
So far only the state-controlled Saudi Aramco Ras Tanura refinery has shut its 550,000 b/d Ras Tanura refinery on Saudi Arabia's east coast after it was struck by debris from intercepted Iranian drones early on Monday.
The Strait of Hormuz represents the world's most important oil chokepoint, with approximately 21 million barrels per day flowing through the narrow waterway. Any sustained disruption would have severe global implications.
Technical analysis of oil price movement
The US-Israel-Iran conflict provoked an up-to-12% initial surge in the oil price, so far taking West Texas Intermediate (WTI) to $75.33., close to the June 2025 peaks at $77.10 - $77.57 which may act as technical resistance. If not, the mid-August 2024 and mid-January 2025 peaks at $80.11 - $80.73 may be reached.
WTI daily candlestick chart
Were a rise and daily chart close above $80.73 to unfold, the July 2024 peak at $84.49 may be hit.
WTI weekly candlestick chart
Potential support sits around the November 2024 high at $77.84, the October 2024 and April 2025 highs at $72.36 - $72.22 and at November to mid-December 2024 highs at $71.47 - $71.38.
While WTI remains above its 2 March low at $69.20, the short-term uptrend is deemed to stay intact and while the next lower 26 February low at $63.60 holds, the medium-term uptrend too.
Equity markets face downside pressure
Equity markets have moved lower, though losses remain measured as investors had partly priced in the risk of conflict. However, with US President Trump suggesting the campaign could last several weeks, a widening of the war -particularly if oil and gas facilities are hit or Hormuz is closed - could trigger a deeper risk-off move, further stock market declines and a sharper spike in crude prices.
From a technical perspective the February lows are the ones to watch as a fall through and daily chart close below these may point to a medium-term top forming in global stock markets.
In case of the S&P 500, a drop below its mid-February low at 6776 would probably engage the mid-December low at 6720. Failure there may lead to the mid-September to November lows and the 200-day simple moving average (SMA) at 6,569 - 6,522 being revisited. Such a sell-off would represent an around 5% decline from current levels.
S&P 500 weekly candlestick chart
Only if a weekly chart close were to be made below the 6522 mid-November trough, would a bearish trend reversal become more likely with the December 2024 to February 2025 highs at 6,147 - 6,100 representing a possible downside target zone. Such a slide would represent a 10% correction in the long-term uptrend.
While the mid-November 2025 low at 6522 underpins, the medium-term uptrend remains valid, though.
Dollar strengthens on safe-haven flows as EUR/USD weakens
When it comes to the greenback, safe-haven flows have propelled the US Dollar Index to a five-week high at 98.53 before slipping back below its 200-day simple moving average (SMA) at 98.17.
US Dollar Index daily candlestick chart
While it remains above its 23 February low at 97.28, the late January to March uptrend is deemed to remain in play with potentially the January peak at 99.31 being reached.
This would translate to a fall through EUR/USD's 200-day simple moving average (SMA) at $1.1666 taking the cross to its mid-January low at $1.1573.
EUR/USD daily candlestick chart
While no bullish reversal above last week’s high at $1.1835 is seen, immediate downside pressure is expected to dominate.
Precious metals attract safe-haven demand
Looking at another safe-haven play, the gold price has seen gains of around 2% since the Middle East conflict began with the precious metal probing the $5400 per troy ounce level. Above it beckons late January's $5602 record high.
Gold daily candlestick chart
Immediate upside pressure should be maintained while the price of gold remains above its last relative 24 February daily chart low at $5093.
The silver price is also pointing higher with the psychological $100 mark once again being in sight.
Silver daily candlestick chart
It looks technically bid and should remain this way as long as no bearish reversal takes the price of silver below its 24 February low at $84.93.
Important to know
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