Oil's Repeated Fakeouts: How to Trade the Hormuz Headlines

Oil handed us another false signal today. A chart that looked ready to break lower gapped up and followed through, ripping the face off the shorts betting on the downside.

What happened

Iran reportedly halted message exchanges with the US over the Israel situation.

According to the reporting, the "resistance front" and Iran set an agenda to completely block the Strait of Hormuz and activate other fronts, including the Bab el-Mandeb Strait. Honestly — is anyone even surprised anymore? We've seen this exact movie too many times. Everything looks like it's heading to a mega fallout, then ceasefire and peace talks appear, then just as the war looks done, it escalates again. The cycle keeps repeating.

And oil ripped another 8%, cleaning out the shorts trying to capture the break lower.

I trade levels, not headlines

Here's the core of it. Before I let myself think "oil's going to $120," I draw the levels it has to break first.

• $100 has to be reclaimed to the upside — that's the first gate.
• To reach $110, it first has to break $105.
• For anything higher, I want a momentum break around $108.

On the other side, the $88 level held for the bulls almost like clockwork. Until that structure breaks, I treat every "looks like it's breaking" move — up or down — with skepticism. I don't believe it until price actually confirms.

So when do I buy, when do I sell

My bias is actually slightly cautious on oil. But because the technicals never showed any downside follow-through, I never took a position.

The interesting part is the fundamental scenario. Strong jobs data is usually bullish for oil — a roaring global economy lifts crude demand. If growth and jobs data turn higher, led by the US, and you layer in inflation and geopolitics, oil could genuinely break its upper limits.

So my scenario splits in two.

1. Upside: With healthy global economies, a break above $104–$108 is a rare case where I'd consider buying the highs. If you're a long-term bull who thinks the Middle East becomes a multi-year debacle rather than a multi-month one, that's the level to watch.
2. Downside: If oil breaks lower and the macro fundamentals shift more bearish at the same time, then I could look for shorts.

Right now I'm neither. I'm in waiting mode.

Why this rattles other markets

Oil jumping like this is itself a source of bullish pressure for assets like the dollar. So even if you don't trade oil, you should be watching this one chart. Most markets are right now, because they're waiting to see which way oil resolves.

And to the people who only trade oil: genuine sympathy. If you've been trying to capture breakouts through this endless gap-up-and-fade chop, it has to have been a painful stretch.