Introduction
Crude oil has shifted quickly from a clean uptrend into a sharp corrective move, with price dropping roughly 15% following news of a ceasefire in the Middle East. The Strait of Hormuz has been open for two weeks, allowing the Oil ships to exit and enter the region. This has given some hope to the crude market that at least for a short period of time, there will be minimal supply disruptions.
This is a good example of how strong trends can unwind fast when the fundamental driver changes. The rally was supported by geopolitical risk, and once that risk premium started to come out of the market, price adjusted aggressively.
For now, even though the sell off was sharp, there is already some buying stepping back into the market which tells us that there is no long term conviction on the path the war is going.
Current Price Behavior
After the drop into the mid-90s, price is trying to stabilize, but the key difference now is how it reacts to buying from the bulls.
Previously, dips were bought quickly. For now, it is difficult to see whether the market price will push back up above $100 or if the rallies will get sold into. It is all based on how much conviction the market has on whether the war is likely to come to an end soon. If the market still believes that it will continue, thus the strait of hormuz closing again, we could see Oil shoot well above $120 per barrel.
Possible Trades
The focus now is less on following trends and more on how price reacts at important levels.
Short trades look better if price moves back into the 100–104 resistance area and then fails. That would suggest that what used to be support is now acting as resistance.
For long trades, the clearer setup is if 95 holds and price stays above it. That would point to a bounce within a range, not a full trend reversal.
For a stronger bullish move, price would need to break back above 103–104. Until then, upward moves will likely struggle.
This analysis is for educational and informational purposes only and does not constitute trading advice. Futures and forex trading involve significant risk and may not be suitable for all investors. Always conduct your own research before making trading decisions.
