Macro Theme: De-escalation and “Unstable Peace” as the Core Pricing Driver
Although last weekend’s White House dinner shooting incident attracted significant attention, it did not create any material impact, and markets were not disrupted at the start of the week. Meanwhile, the ongoing “Middle East saga” continues steadily, and the U.S. decision not to arrange “in-person” negotiators suggests that the intermediary model has shifted toward “remote” communication. If no surprise attacks occur within the next one to two weeks, it can largely be concluded that this tug-of-war style “peace” will persist until around the midterm elections, when potential changes or turning points may emerge.
The three potential models and scenarios of U.S.-Iran negotiations have already been discussed in previous articles, so they will not be repeated here. Those who have not read them may refer back to last week’s or the week before’s content.
Asset Pricing Framework: Trend Continuation Coexisting with Range-Bound Volatility
Assuming the long-term “delay strategy” materializes, the key is to classify different asset classes and adopt corresponding trading approaches. For clearly strong assets such as U.S. equities, the primary strategy remains buying on pullbacks. This likely applies to most global equity markets as well. At least over the next 1–2 quarters, no trend reversal or major downturn is expected. These are trend-following assets—those already positioned need not rush to exit, while those not yet in should avoid chasing at elevated levels.
Most other assets are likely to enter a wide trading range, characterized by rebounds after significant declines and pullbacks after strong rallies. A representative example is crude oil, where the previously established 80–120 range is expected to serve as a key boundary constraining both bullish and bearish moves. Precious metals such as gold and silver are also likely to remain range-bound for a period, rather than accelerating into a downward trend.
$WTI Crude Oil - main 2606(CLmain)$ $E-mini Crude Oil - main 2606(QMmain)$ $Micro WTI Crude Oil - main 2606(MCLmain)$ $Gold - main 2606(GCmain)$ $E-Micro Gold - main 2606(MGCmain)$ $1-Ounce Gold - main 2606(1OZmain)$ $E-mini Gold - main 2606(QOmain)$ $USD Gold Futures - main 2605(GDUmain)$ $Silver - main 2607(SImain)$ $E-mini Silver - main 2607(QImain)$ $iShares Silver Trust(SLV)$ $ProShares Ultra Silver(AGQ)$
Key Asset Analysis: Diverging Rhythms Between Crypto and the U.S. Dollar
Crypto assets show similar patterns. Although recent performance has been very strong and the rebound has led other assets, the developments in Q4 last year have already impacted their fundamentals. In addition, the lack of technological updates or new narratives limits upside potential. A return of Bitcoin to $100,000 would already exceed expectations. Therefore, for this asset class, once the rebound reaches maturity, it is advisable to decisively sell at relatively high levels. It is worth noting that crypto assets still possess some leading indicator value.
$Bitcoin(BTC.USD.CC)$ $Bitcoin(BTC.USD.HKCC)$ $CME Bitcoin - main 2605(BTCmain)$
The foreign exchange market is less straightforward. Although a bearish stance on the U.S. dollar was emphasized last week, it cannot be ignored that under relatively stable conditions, the likelihood of a sharp dollar collapse in the short term remains low. Covering short positions at lower levels and selling the dollar at higher levels may be a more appropriate approach. Only after a decisive break below long-term support should it be treated as a trend-driven asset.
$USD Index(USDindex.FOREX)$ $British Pound - main 2606(GBPmain)$ $Invesco CurrencyShares British Pound Sterling Trust(FXB)$ $Euro FX - main 2606(EURmain)$
Risk and Timing: Watch for Shocks, but Time Favors Range Trading
There is still some flexibility and time for maneuver, so the possibility of another unexpected strike by the U.S. and Israel cannot be completely ruled out. However, if the market gets through this week and next, the broader trajectory will largely be set.
We will begin positioning according to the aforementioned framework this week, patiently waiting for prices to reach favorable levels. As long as the risk-reward profile is attractive, short-term news fluctuations will not be a concern.
Strategy Implementation: Trade Setups Across FX, Gold, Crypto, and Oil
For this week’s strategy, we continue to hold long GBP positions with an average entry of 1.3250. The stop-loss is raised to 1.3350 to lock in a minimum level of profit. Targets remain at 1.3700 and 1.4270.
Gold has failed to break higher over the past 1–2 weeks, and near-term upside momentum is limited. Therefore, we have canceled previous short orders. This week, we place new limit buy orders at 4500 and 4380, with a stop-loss at 4240 and a target of 4840.
New Bitcoin orders are set with a limit sell at 89,700, a stop-loss at 98,300, and a target of 81,000.
Extreme-case orders for crude oil remain unchanged: limit buy at 70, stop-loss at 58, and target at 94.
$S&P 500(.SPX)$ $E-mini S&P 500 - main 2606(ESmain)$ $Micro E-mini S&P 500 - main 2606(MESmain)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ 100(NDX)$ $NASDAQ(.IXIC)$ $E-mini Nasdaq 100 - main 2606(NQmain)$ $Invesco QQQ(QQQ)$ $Dow Jones(.DJI)$ $E-mini Dow Jones - main 2606(YMmain)$ $Micro E-mini Dow Jones - main 2606(MYMmain)$
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