Public trading strategy

Iran peace deal could flood the market with oil — short crude oil funds as price

Thesis

Oil prices have been inflated by the risk of war in the Middle East, with some experts warning prices could hit $150 a barrel if the conflict continues. However, a sudden peace deal would instantly remove this 'risk premium' as oil flows freely again. The stock market is already rallying on this news. A sudden reopening of the Strait of Hormuz would likely trigger a sharp sell-off in oil prices as global supply fears vanish.

Strategy approach

Build a short volatility/bearish strategy on crude oil (USO). Enter short if USO closes down more than 3% for the day and the RSI(14) is below 40. Use a 2% stop loss above entry and a 6% profit target.

Markets and timeframes

USO1D

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