Brent Oil's Gap Lower: Bull Trap or Genuine Reversal?

That divergence raises the possibility that Monday's sharp decline is a bull trap rather than the beginning of a sustained reversal. Financial markets can remove geopolitical risk premium within hours. Restoring confidence in global shipping networks typically takes much longer. Unless vessel traffic through Hormuz begins recovering meaningfully and conditions stabilize in the Red Sea, physical supply constraints will limit how much premium can realistically be removed. A quick recovery above $90 would suggest Monday's gap primarily flushed speculative long positions rather than signaling that the underlying supply shock has ended.

Technically, Brent was rejected by the 61.8% retracement of the 119.50-70.14 decline at 100.64, triggering a steep pullback from last week's high near 102. The broader bullish interpretation has not been invalidated. The advance from 70.14 is still viewed as the first impulsive wave of a larger long-term uptrend. The current decline has retraced into the fourth-wave territory of a lesser degree between 83.71 and 87.55, a common corrective zone in Elliott Wave analysis. Selling pressure paused just ahead of the 50% retracement of 70.14 to 102.00 at 86.07, with the 55-day exponential moving average at 87.37 providing additional support.

Consolidation below 102.00 is now likely. The near-term bias still favors another upside break provided physical supply conditions fail to improve. A swift rebound above 90 would strengthen the case that Monday's selloff was largely a positioning washout before the broader advance resumes. A decisive break below 86.07, accompanied by sustained trading beneath the 55-day EMA, would weaken the bullish structure and shift focus back toward a deeper fall, potentially reopening the path to the 70.14 low.