Following Trump’s announcement over the weekend that the United States is close to reaching an agreement with Iran, oil prices naturally opened with another gap lower at the start of the week. The overall trajectory of geopolitical developments is consistent with what we anticipated in April, and this phase of relative peace is likely to last through the period around the midterm elections toward year-end. Although both technicals and news flow have dealt a double blow to the market, the structural issues in the Middle East will not be fundamentally resolved as a result. Therefore, if oil prices undergo a sufficient pullback going forward, lower levels should still provide solid support. In addition, changes on the news front are unlikely to alter the broader trends of most asset classes; many instruments should still be approached with a wide-range trading mindset, seeking opportunities through buying low and selling high.
On the monthly chart of crude oil, although there is still one week before the close, the dominant theme remains a correction of the rally seen in March. A medium- to large bearish candle is naturally weaker than a doji, but the presence of an inside-bar pattern suggests that the rhythm is not materially different from April. While the range of fluctuations remains broad, it is clearly insufficient to shake the shift in trend from bearish to bullish that began with the escalation of the Iran situation. Consolidation is likely to continue for another 1–3 months, but as long as key support levels are not broken, there is no significant technical risk.
On shorter-term charts, there is no doubt that bears have secured a phase victory. The market ultimately broke downward out of the triangular consolidation, making a continued move lower to search for effective support the primary direction in the coming weeks. Based on previous position-switching zones and structural target levels, the area around 80 is expected to remain an important line of defense and support for crude bulls. A deeper layer of core support lies around 70/69. The eventual depth of the correction is still uncertain, but the initial downside move is likely to bring rebound opportunities that can be traded. Medium- to long-term traders can look for positioning opportunities around these two levels.
As for how the news flow may evolve going forward, under normal circumstances the more likely scenario is that the imminent agreement will help sustain the ceasefire. However, based on our earlier political analysis, such a truce is by no means permanent, but rather a mutually accepted delaying tactic. A new round of uncertainty is likely to re-emerge toward the end of the year, when the situation may become more complex and could even trigger a genuine financial shock. That said, a relatively optimistic atmosphere can still be maintained before that point.
There is also a lower-probability scenario in which the situation becomes repeatedly volatile and drawn out, with potential variables stemming from Israel’s role and actions. However, regardless of how events evolve, the risk of a near-term return to full-scale conflict remains low. In other words, if a comprehensive agreement is not reached, the outcome may resemble most of May, with both Iran and the United States maintaining their own narratives and each claiming victory. This represents a form of unstable stability that does not disrupt the current market regime, and asset price trends are unlikely to loosen as a result.
In summary, given that developments in the Middle East are broadly in line with expectations, our trading logic remains unchanged: for stronger assets, we maintain a “trend persists” mindset; for most instruments, we adopt a range-trading approach focused on buying low and selling high; and at clearly defined highs and lows within a range, decisive attempts should be made.
From a strategy perspective, last week’s pending gold orders were not triggered, and with prices now around mid-range levels, we cancel those orders and wait for new trading opportunities.
This week, we focus on positioning in crude oil: for the medium term, place buy orders at 80 and 70 (half position each), with a stop-loss below 60 and take-profit targets at 95 and 115 (taking profit on half the position at each level).
For the short term, place a sell order at 101, with a stop-loss at 111 and a target at 81, with the order valid for the week.
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