WTI Opens with Sharp Gap Lower on Middle East Truce

Traders' Opinions

Summary:

WTI crude oil plunged more than 7% on Monday after the United States and Iran paused military operations over the weekend, easing immediate fears of a broader regional conflict and reducing concerns over prolonged supply disruptions through the Strait of Hormuz.

SELL WTI

EXP

TRADING

82.100

Entry Price

78.000

90.000

82.940 -6.285 -7.04%

0.0

Pips

Flat

78.000

Exit Price

82.100

Entry Price

90.000

West Texas Intermediate (WTI) crude oil opened sharply lower on Monday, gapping down more than 7% to trade near $82.50 per barrel as investors rushed to unwind the geopolitical risk premium built into prices over the past two weeks. The sharp decline followed a pause in military strikes between the United States and Iran over the weekend, raising hopes that the conflict may be shifting toward diplomacy rather than further escalation.

The temporary halt in hostilities has eased immediate concerns over disruptions to global energy supplies, particularly through the Strait of Hormuz, a vital shipping route that carries a significant share of the world's oil exports. Traders are increasingly betting that a sustained diplomatic effort could eventually allow commercial shipping to resume normal operations through the strategic waterway.

The easing in tensions also came after reports that the US military suspended its operations due to concerns over declining interceptor missile inventories and the limited number of remaining strategic targets inside Iran. According to reports, senior military officials warned that extending the campaign would place growing pressure on critical US weapons stockpiles.

Meanwhile, US Ambassador to the United Nations Mike Waltz said American forces remain prepared if necessary, but stressed that President Donald Trump wants to allow room for negotiations. Iranian officials also signaled that Tehran would suspend attacks as long as US military operations remain on hold, reinforcing cautious optimism that both sides may avoid further escalation.

Despite the sharp selloff, risks to oil markets have not disappeared. Iran-backed Houthi forces continue to threaten shipping routes in the Red Sea after claiming responsibility for attacks on Saudi facilities, leaving traders alert to the possibility that fresh disruptions could quickly revive supply concerns.

Technical Analysis

WTI crude oil has shifted from a strong bullish trend into a corrective phase after breaking below its well-defined ascending channel on the 2-hour chart. The decisive breakdown beneath channel support signals that bullish momentum has weakened considerably, with sellers now attempting to establish control after prices failed to sustain gains above the $90.00-$92.00 resistance region. The recent recovery from the $83.00 area appears corrective rather than the beginning of a fresh uptrend, as price continues to trade below the broken trendline, which has now turned into dynamic resistance.

The $85.50-$86.00 zone represents the first major resistance and coincides with the previous support area that failed during the latest selloff. A sustained recovery above this region would ease immediate downside pressure and expose the $89.00-$90.00 resistance area. However, only a decisive break above $92.00 would invalidate the current bearish outlook and shift the focus back toward the $95.00 region.

On the downside, the $83.00-$84.00 support area is proving to be an important near-term floor after attracting buyers during Monday's rebound. A confirmed break below this zone would likely accelerate selling pressure toward the $78.00 support region, where previous consolidation occurred. Failure to hold there could expose the $75.00-$76.00 area, while a deeper decline would bring the $70.00 psychological level into focus, marking a significant correction from the recent rally.

Momentum indicators also suggest that the recovery lacks conviction. The Relative Strength Index (RSI) has recovered from oversold territory but remains below bullish breakout levels, indicating that buying momentum is stabilizing rather than strengthening. Meanwhile, the Moving Average Convergence Divergence (MACD) is attempting to turn higher but remains below previous momentum peaks, suggesting the latest bounce is more consistent with a relief rally inside a developing bearish correction than the start of a renewed uptrend.

TRADE RECOMMENDATION

SELL WTI OIL

ENTRY PRICE: $82.10

STOP LOSS: $90.00

TAKE PROFIT: $78.00

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WTI Opens with Sharp Gap Lower on Middle East Truce

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