Iran peace deal crashes oil prices — short oil on the momentum
Thesis
The biggest risk to oil prices—war in the Middle East and blocked shipping lanes—just vanished. When a major geopolitical premium disappears, oil prices tend to fall quickly to reflect normal supply and demand. Now that Iran is reopening the Strait of Hormuz, the market is flooded with available supply, driving prices to a three-month low. This sudden drop in price has strong momentum behind it, making it a good opportunity to bet against oil companies and crude prices until they find a new, lower bottom.
Strategy approach
Build a trend-following short strategy on USOIL (WTI Crude) on the H4 timeframe. Enter short when price breaks below the lower Bollinger Band (20, 2) and the 14-period RSI is below 45. Exit if price closes above the 20-period Simple Moving Average. Use a 2% fixed stop loss.