To The Moon

After two months of back-and-forth, the US and Iran finally announced over the weekend that a ceasefire memorandum of understanding had been reached. Although the final signing is still a few days away, the market has already fully priced in the impact of the news. Before the fourth quarter, geopolitical issues are expected to stop bothering investors. On the trading side, we still lean toward the view that most assets will remain range-bound over the next one to two quarters. As long as there are attractive relative lows or highs and the risk-reward is acceptable, there will be opportunities to try and trade the move.

We will not go into the details of the agreement itself. Those can be found on various financial websites. Instead, we will focus on how asset prices are moving. Crude oil is naturally the first market to come under pressure. With the Strait of Hormuz set to “open for free” this Friday, the bearish impact on oil has in fact already been reflected over the past few weeks. After gapping lower at the start of the week, prices have once again moved close to the key USD 80 level.

$WTI Crude Oil - main 2607(CLmain)$ $Micro WTI Crude Oil - main 2607(MCLmain)$ $E-mini Crude Oil - main 2607(QMmain)$

From a technical perspective, the prior triangle breakdown and the continued decline in weekly highs and lows are both bearish signals. This means that a process of range trading and base-building is likely to remain the main direction for some time, while the chance of a sharp reversal higher is relatively low. However, from this year’s cycle perspective, the situation is somewhat different: the current pullback looks more like a correction to the larger 54–119 move than a full shift back into a bearish trend.

At the same time, from a macro perspective, our earlier view has always been the forecast of “fighting in the first quarter, peace in the second and third quarters, and fighting again in the fourth quarter.” We are now more than halfway through the year, and the news flow has broadly matched that view. It is also quite possible that the same playbook will be used again around the midterm elections. Therefore, if the current adjustment and consolidation create attractive relative lows, they may offer medium- to long-term opportunities.

Gold is also a market that is still in a broad consolidation phase, but its center of gravity is moving lower. Last week, prices briefly broke below the previous key weekly low, but then rebounded from the bottom, avoiding the risk of an accelerated move lower triggered by a break below 4000. With this potential bear trap in place, the 4000–5000 dollar range may serve as an important support and resistance zone during the summer trading period. After this year’s reversal in precious metals, gold will likely still need more of a pullback before its long-term investment value becomes clearer. The expected range is around 3500 to 2900.

$Gold - main 2608(GCmain)$ $E-Micro Gold - main 2608(MGCmain)$ $SPDR Gold ETF(GLD)$ $1-Ounce Gold - main 2608(1OZmain)$ $E-mini Gold - main 2608(QOmain)$

Global equity indices, especially US equities, are still in a “the strong stay strong” environment. Taking the S&P as an example, even though there was a short-term pullback on the weekly chart, the longer-term slow bull trend of steady range-bound gains does not yet have the conditions for a rapid reversal. The 7000 level, which was previously a historical high, is now beginning to turn into strong support. Normal corrections and consolidations are not expected to break through that level.

$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $E-mini S&P 500 - main 2609(ESmain)$ $Micro E-mini S&P 500 - main 2609(MESmain)$ $Dow Jones(.DJI)$ $E-mini Dow Jones - main 2609(YMmain)$ $Micro E-mini Dow Jones - main 2609(MYMmain)$ $SPDR Dow Jones Industrial Average ETF Trust(DIA)$ $NASDAQ 100(NDX)$ $NASDAQ(.IXIC)$ $E-mini Nasdaq 100 - main 2609(NQmain)$ $Invesco QQQ(QQQ)$ $Nasdaq ETF(BK4593)$ $Nasdaq(NDAQ)$ $Micro E-Mini Nasdaq 100 - main 2609(MNQmain)$

Overall, foreign exchange, commodities, and crypto assets are not being significantly affected by the news and are likely to remain range-bound. The stock market, despite the risk of being overextended, is still trend-wise leaning bullish, so those are the two main directions to focus on for trading.

On the strategy side, the previous pending orders were not filled, and this week marks the start of a new theme cycle, so we are re-positioning and trying again.

For gold, place a sell limit at 4428, with a stop loss at 4628 and targets at 4028 and 3730, split equally.

For crude oil, re-enter the previous long-term orders: place long positions at 80 and 70, with a stop loss at 60 and targets at 95 and 115, split equally.

P.S. If the first target is reached, the stop loss will automatically be moved to the entry level. Any adjustments after execution will be updated in subsequent articles.