Market gaps typically appear on Monday mornings in Asia, which is Sunday evening in the US. This pattern repeated after the US struck Iranian nuclear sites, causing USD to rise and US equity index futures to open with a small gap lower on 16 June 2025.

Gaps often fill unless the news is unexpected or substantial, leading to extended moves. Previously, indicators from President Trump suggested potential actions, with equities dipping slightly and oil prices rising on Friday.

Following the open, markets saw partial recovery. ES bounced from its lows, almost covering its gap, while EUR/USD opened lower and covered around 50%.

Oil Market Movement

Oil’s market movement is noteworthy, as it only partially filled its gap, reverting to a ‘triple top’ seen earlier the previous week. This situation presents a potential opportunity for market participants.

What we’ve seen is a recurring pattern in market behaviour tied to geopolitical disruption—specifically military action—triggering initial risk-off sentiment. When the United States moved against Iranian nuclear facilities, the gap lower in equities and gains in the dollar made sense. Traders saw this as a reason to flee equities and rotate into safer assets, including the US dollar. What’s interesting is how the markets behaved in the hours that followed.

Much of that gap was clawed back in equity futures, pointing to either disbelief in the follow-through of the breaking news or an overreaction to headlines. The S&P futures (referred to as ES) nearly completed a full retrace. This wasn’t a small move. It’s a response from investors who aren’t convinced the military strike will spiral into something broader. At the same time, the dollar’s strength wasn’t fully undone. The euro’s retreat and partial bounce imply that some forward bias persists in favour of the greenback.

Oil, meanwhile, followed its own logic. It did not fully retrace. What we noted was its hesitance just below previously observed resistance—this “triple top” from earlier in the week. Large options positions or futures hedging may be at play here. The failure to fill the gap leaves room for a breakout if upcoming data or events stoke energy demand or supply fears.

Market Implications

From our view, this mixed reaction opens up a few tactical directions for those focusing on derivatives. First, in equity indices, the gap behaviour offers a reference level—it becomes a point to watch if volatility returns. The speed of the partial fill reveals where buyers are willing to step in. That area now behaves like a soft floor unless headlines worsen materially.

Currency moves, especially in EUR/USD, did recover somewhat, but not entirely. This leaves traders with a few implications. Volatility remains low in realised terms, but implied skews suggest traders are buying downside hedges in the single currency. There’s a directional lean there, even if not strongly expressed in spot.

The oil action suggests buy interest is hitting supply just ahead of multi-week highs. But the lack of follow-through still matters. Momentum traders hoping for a breakout may hesitate without support, while range traders might use this as a level to stay with until further news develops. There’s no need to rush positioning until there’s either sustained demand above that resistance, or a failure that pushes prices back into the prior range.

During these quiet periods between reaction and confirmation, watching implied volatility changes across rates and commodities can offer useful clues. It tells us how much uncertainty remains priced into options. We’re paying attention particularly at the front-end contracts of oil, where pricing is most sensitive to immediate supply worries.

For us, the reactions across assets hint that traders are still waiting for the other shoe to drop—or not. The difference in the completeness of the gap fills across instruments reflects differing degrees of conviction. Equities rebounded more than energy, and that tells us traders consider this a contained event for now, though caution remains.

These small differences in gap behaviour speak volumes. They tell us which asset classes are attracting speculative money and which are being avoided. By watching how far and how fast these gaps get filled, we can measure sentiment more precisely. It’s not about guessing headlines but tracking how prepared the market is to either fade or lean into them.

So in the days ahead, the levels drawn by this weekend’s action remain our guideposts. They’re not just entry points—they help define where conviction lies. And conviction tends to precede trend.

Create your live VT Markets account and start trading now.