The Contrarian Oil Trade
Everyone's been bullish oil on Iran tensions.
Strikes seemed imminent.
Risk premium was baked in.
The Reality:
RSI topped 70... and MFI over 80...
Both were OVERBOUGHT.
What Happened:
- OILU spiked to $34 on Iran fears
- US-Iran talks now scheduled for Turkey this week
- Price crashed -6.93% to $30.50 today
- Geopolitical risk premium evaporating
When everyone is bullish on a narrative (Iran strike!), check your indicators.
RSI approaching 70, MFI approaching 80 = overbought.
Small position, larger payoff. Fade the narrative when indicators flash overbought. You don't need to catch the exact top. A small short position with defined risk can pay off big when the narrative unwinds like it did today.
Indicators > Headlines.
