Public trading strategy
Peace deal reopens oil shipping lanes — short oil on falling prices
Thesis
The Strait of Hormuz has been closed for over three months, keeping oil prices artificially high due to war fears. With the waterway reopening, that fear premium is evaporating and oil is slumping as supply disruptions end. Because energy costs were a major driver of recent inflation, cheaper oil is great for the broader economy but bad for oil stocks. This news creates strong downward momentum for oil prices as the market adjusts to a normalized supply chain.
Strategy approach
Build a momentum strategy that enters short USO on the 1D timeframe when the price breaks below the lower Bollinger Band (20, 2) and the 14-day RSI is below 40. Exit the trade if the price closes back above the 20-day simple moving average, or use a 5% stop loss.
Markets and timeframes
USO1D