Market gaps usually occur on Monday mornings in Asia, which is Sunday evening in the US. This pattern happened again after the US targeted Iranian nuclear sites, leading to a rise in USD and a small drop in US equity index futures on June 16, 2025. Gaps often fill up, unless the news is surprising or significant, which can result in bigger moves. Earlier indicators from President Trump hinted at possible actions, causing equities to dip slightly and oil prices to rise on Friday. After the markets opened, they showed some recovery. ES bounced back from its lows, almost closing its gap, while the EUR/USD currency pair opened lower but covered about 50% of its gap.

Oil Market Movement

Oil’s movements are important because it only partially filled its gap, returning to a “triple top” previously seen last week. This creates a possible opportunity for traders. We’ve noticed a pattern where geopolitical events, such as military actions, lead to initial risk-off feelings. When the US acted against Iran’s nuclear sites, it made sense for equities to drop and the dollar to gain. Traders moved away from equities to safer assets like the US dollar. However, the market’s reaction in the following hours was intriguing. Much of the equity futures gap was recovered, suggesting disbelief in the breaking news or a possible overreaction. The S&P futures (known as ES) nearly retraced fully. This was a significant move, indicating that investors were skeptical about the military action escalating further. Meanwhile, the dollar’s strength persisted. The euro’s slight decline and partial rebound hint at continued support for the greenback. Oil, on the other hand, followed different reasoning. It did not fully recover. We observed a reluctance just below previous resistance—this “triple top.” Large options positions or futures hedging may influence this. The gap not being filled leaves room for a breakout if upcoming data stirs concerns about energy supply or demand.

Market Implications

From our perspective, this mixed reaction opens several tactical options for those focused on derivatives. In equity indices, the gap behavior serves as a reference level—it’s a point to monitor if volatility returns. The speed of the partial fill indicates where buyers are willing to act, creating a soft support area unless headlines worsen significantly. Currency moves in EUR/USD did recover somewhat, but not completely. This situation provides a few insights for traders. While actual volatility remains low, implied skews suggest that traders are purchasing downside protection for the euro. There’s a tendency in that direction, even if it’s not strongly visible in spot trading. The action in oil shows that buying interest hits supply just under multi-week highs. However, the lack of follow-through is significant. Momentum traders seeking a breakout may pause without support, while range traders might maintain their positions until more news appears. There’s no rush to adjust positions until either demand consistently exceeds resistance or prices fall back into previous ranges. During these quiet periods before reactions solidify, monitoring changes in implied volatility across rates and commodities can provide valuable insights. This helps gauge the uncertainty priced into options, particularly focusing on short-term oil contracts sensitive to immediate supply concerns. Our observations indicate that traders are still on alert for major developments. The varying extent of gap filling across different assets shows different levels of confidence. Equities bounced back more than energy, suggesting that traders view this event as contained, though caution remains. These small differences in gap behavior reveal a lot. They indicate which asset classes are attracting speculative money and which are being overlooked. By tracking how quickly and fully these gaps are filled, we can better gauge market sentiment. It’s not about predicting news but understanding how willing the market is to move either against or with it. In the coming days, the levels established by this weekend’s shifts will guide us. They serve as key areas—not just for entry points but also for defining where conviction lies, and conviction often precedes broader trends. Create your live VT Markets account and start trading now.

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