The Strait of Hormuz is to be opened in 30 days, Oil down 7% – WTI Technical analysis

• WTI Oil is back to early May levels, when initial peace processes were announced as Trump foreshadowed a re-opening of the Strait of Hormuz in 30 days
• Crude tumbles 7% in this low volume session, looking to confirm price and volume but the narrative is positive for Markets to start the week
• Exploring an in-depth Technical Analysis of Crude Oil

WTI Crude Oil is experiencing a concrete free-fall today, tumbling 7% and crashing right back down to early May levels.

The huge catalyst driving this violent downside action is President Trump's blockbuster announcement foreshadowing a complete reopening of the critical Strait of Hormuz within the next 30 days.

Although this severe collapse is unfolding during a notably low-volume holiday trading session, traders are still looking to confirm the price action and volume.

Regardless, the overarching narrative provides an incredibly positive, fundamental tailwind for broader financial markets to kick off the trading week.

While the headline alone is enough to severely drain the geopolitical risk premium from the energy sector, traders remain acutely aware of the complex physical realities on the ground.

Crude oil may only experience its true, structural correction once the strait actually resumes normal maritime operations (120 ships ~ per day), and even then, existing supply droughts will inevitably create lagging effects before physical prices can fully normalize lower.

Nevertheless, this massive diplomatic breakthrough represents the most concrete, actionable news the market has received in over two months.

Looking at the explosive reactions across global assets as futures markets finally open to start the (shortened) week, traders active during this holiday session are treating this breakthrough as a profoundly pivotal turning point for the entire energy complex.

Now, let's take a closer look at the technical analysis for WTI Crude to see if prices can continue to correct.

Read More:

• Markets are closed, but futures are exploding – Dow Jones, Nasdaq and S&P 500 Intraday Levels
• Asia open: US futures gap up on US-Iran peace deal hopes with US dollar in retreat
• A final path to peace? Markets Weekly Outlook

WTI Crude has just broken its large triangle formation, holding since Early April and forecasting more downside ahead.

The headlines just landed and traders will have to be critical of how serious the idea of a Hormuz reopening really is, but what is sure is that the dynamic in Oil has changed.

Reaching a key support, long-term bearish momentum will be more probable if the actions fails to rebound above the $96 level (top of the Momentum Support).

WTI Technical Levels:

Resistance Levels

• $98 to $100 Pivot (4H 200-period MA Short-term bearish below)
• $103.03 4H 50-period MA
• $106 to $108 June 2022 Resistance
• $109 Triangle resistance
• 2022 and Monday highs $117 to $120 (larger channel top)

Support Levels

• Momentum Support $93 - $95 (testing) fully bearish below
• $90 Psychological level
• $87 to $90 mini-Support
• Micro support $85
• $82 Friday 17 lows
• 2025 Highs Key Support $78 to $80

A good sign for bears is the fact that despite the oversold conditions, for a first time, bulls haven't surged back in to buy the dip indicating a change in momentum.

With the 50-Hour MA crossing below the 200-MA, expect more sells on pops rather than buys on dips.

This confirms especially more if bulls fail to close tomorrow's session above the $96 highs.

Breaching below $90 re-opens the way towards $80 and lower.

Safe Trades and Keep your eyes on the news!

Follow Elior on Twitter/X for additional Market News, Insights and Interactions @EliorManier