Middle East Conflict, Falling Oil, and Stock Market Highs: What’s Really Going On in the Markets?
While Iran threatens to close the Strait of Hormuz and tensions escalate in the Middle East, we’re seeing oil prices drop, gold surge, the dollar correct sharply — and at the same time, U.S. stock markets break historical highs. Seems contradictory? That’s how markets work: price already discounts everything.
In this article, we’ll break down the main global markets using technical analysis, Fibonacci projections, price action, and flow reading.
Nasdaq Breaks Highs, but Signals Exhaustion
On the Nasdaq’s monthly chart, we’ve seen a strong rally since the 2020 pandemic, peaking in 2021 and then correcting by more than 37%. This correction respected the previous high — the peak of the bull run — right at the 50% Fibonacci retracement level. From that point, the uptrend resumed.
Currently, price has broken past its all-time high, but with the RSI entering overbought territory and declining volume. This signals potential weakness in the trend. On the weekly chart, projecting the pivot structure, the first Fibonacci target (100%) has already been reached. The next target, the 161% extension, points to the 24,900 region.
S&P500: Same Pattern, Same Setup
The S&P500 shows a very similar structure to the Nasdaq. The 2021 top served as support, aligned with the 50% retracement. Projecting the pivots on the daily chart, the first Fibonacci target has also been hit. The second target, the 161% projection, is around 6,253 points.
What About the Dollar? Is It Time to Buy?
The dollar dropped from R$ 6.30 down to R$ 5.50, testing the 50% Fibonacci retracement. If it continues to the 61.8% retracement, it would reach R$ 5.30. On the weekly chart, the dollar is forming lower highs and lower lows — a bearish structure. If the current low is broken, there’s technical space to reach that 61.8% level.
Even with geopolitical tensions and the threat of war, the dollar hasn’t appreciated. This could be an opportunity to dollarize your portfolio while the exchange rate is favorable — quite the opposite of when everyone rushed to buy above R$ 6.00.
Oil Drops Despite War Threats
On the monthly chart, oil continues to respect a downtrend line drawn since mid-2023. On the weekly chart, this trendline was confirmed with three touches. A classic bull trap followed by a sharp bearish move — what we call a “bear slap” — delivered potential profits of up to $12,000 per contract for short sellers.
Technically, the move was textbook: a bearish pivot, a 61.8% retracement, and a 161% projection — all aligning with the trendline. On the daily chart, oil is now correcting that drop and testing the 20-period moving average. A reversal hasn’t been confirmed, and entering short at this level can be risky given how extended the move already is.
Gold: Safe Haven in Trend, But Showing Strain
Gold’s monthly chart shows a strong uptrend, but with warning signs: six consecutive bullish candles, RSI at 87, and declining volume. A correction down to the 38% retracement would imply a 20% drop in gold’s price.
On the weekly chart, the trend is still up, respecting an ascending trendline. However, if the current low is broken, the trend would reverse — with gold forming a double top, breaking below the low, and dipping under the 20-period moving average.
The daily chart has already confirmed a bearish pivot. The short-term trend is now down. Still, because the weekly chart remains bullish, this move needs to be monitored with caution.
Silver: Lagging Behind Gold but Nearing Its Target
Unlike gold, silver is still far from its all-time high. However, the chart shows a bullish pivot that’s nearing its final Fibonacci target, just above $39 per ounce.
At this level, the risk-reward ratio is unattractive — price is too close to the target, and stops would be expensive. That said, a consolidation or pullback could create a new opportunity.
Is It Still Worth Buying Stocks?
Despite Nasdaq and S&P500 hitting record highs, many individual stocks remain undervalued — some have dropped over 30%, even while the indexes reach new peaks.
There are solid opportunities, especially in dividend-paying stocks with long-term growth potential. For investors willing to dig deeper and analyze sector by sector, there are great discounts waiting to be picked.
How to Find Sector-Based Opportunities?
Using the free scanner tool on the ExStation 5 platform, you can filter stocks by sector. In the video example, the filter was set to the oil sector — revealing companies like ExxonMobil, Chevron, Shell, and even Petrobras. Switching the filter to the pharmaceutical sector reveals names like Johnson & Johnson, AstraZeneca, and Pfizer.
It’s a simple, free, and powerful tool for traders and investors who want to study sectors and quickly identify promising opportunities.
With so many assets at critical technical levels — the dollar at support, oil testing resistance, gold overextended, and indices breaking records — technical analysis remains the trader’s best ally in understanding what truly matters: price movement.
If you’re serious about trading, you already know what to do: study the charts, test in the simulator, and keep sharpening your market reading skills. Let’s go!
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