Oil surges over 10% as geopolitical tensions drive volatility

Following rising tensions in the Middle East, oil has seen a dramatic spike in volatility, with price jumping more than 10 percent in a single session. This sudden move has caught the market’s attention, but from a technical perspective, this breakout did not come out of nowhere.

Back in early May, we noted the formation of a high time frame double bottom on the daily chart, with the neckline around the 66.00 level. While sentiment at the time was largely bearish, the technical setup was pointing toward a potential reversal. That reversal has now been confirmed with a clean breakout above 66.00, and oil is currently trading well above 70.00.

This reclaim of the 66.00 zone is significant, as it places price back inside the broader trading range that has defined oil markets for the past five years, with the recent dip below now appearing more like a deviation than a sustained breakdown.

The key question now is how oil will behave going forward, especially with uncertainty still surrounding geopolitical developments in the region.

Looking at the 4-hour chart, we can identify three clear levels of interest.

First is the 72.00 area, marked as number 1, which could act as immediate support if momentum remains strong. In trending environments, the more bullish the structure, the shallower the retracements tend to be, making this level one to watch for short-term continuation.

Below that, the 69.00 level, marked as number 2, stands out as a more probable support if we see a deeper retrace. This would still fit within a bullish framework, especially if the move lower is accompanied by profit-taking rather than a shift in sentiment.

If tensions ease and the market reverts, price could pull back toward the high time frame support zone at 65.00, marked as number 3. While a revisit to this level would still be technically valid within the current double bottom structure, a clean break below would put pressure on the bulls and potentially invalidate the broader bullish narrative.

For now, the breakout is confirmed, and oil is back in a historically relevant trading zone. Price action in the coming sessions will depend heavily on both geopolitical developments and how price reacts to the support levels below.

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