Public trading strategy
Geopolitical oil spike meets reopening supply — short the oil bounce
Thesis
The latest U.S. strikes on Iran are driving a knee-jerk rally in oil markets. However, combining this with the news that the Strait of Hormuz is reopening and Saudi Arabia is preparing to slash prices suggests the supply fears are overblown. When geopolitical fear spikes fade and supply remains abundant, oil stocks tend to give back their panic gains quickly. A short-term fade on oil producers capitalizes on this pattern of fear-driven spikes unraveling.
Strategy approach
Build a rule-based mean-reversion strategy on D1 timeframe for XLE or USO. Enter short when price spikes >3% in a single session on geopolitical news AND RSI > 70. Exit when price crosses below the 10-day SMA or after a 15-day max hold. Include a 4% stop loss above the spike high.