Why the US–Iran War Scare Is Overdone — and Watch WTI's $80 Line
Last week the Middle East situation produced fresh news again — from the U.S. air strikes on Iran to Iran closing the Strait of Hormuz — as if the old script were playing out once more. We noted before that the U.S.–Iran contest is unlikely to end peacefully, and will most probably reignite in the fourth quarter. So will the current developments bring the new fighting forward? On the whole, the probability is relatively limited, because the timing on the U.S. (Trump) side is not yet fully ready, and market behavior also shows that overall sentiment remains relatively stable.
From the standpoint of long-term goals, taking Iran down — or at least striking it thoroughly — is the core demand for the U.S. However, both the military situation and inflation pressure previously meant the stalemate would be hard to break in the short term. Pushing it back to year-end not only allows two quarters of correction time, but also, in terms of timing, resonates with the midterm elections. Regardless of how the battle for the two chambers of Congress turns out, Trump will have corresponding reasons to send troops again. But if there were a full-scale escalation now, off nothing more than minor friction, the situation would instead revert to the first-quarter state and struggle to produce any substantive result.
This assumption is also fairly evident in oil prices. Although we are long-term bullish and long crude, the news from last week until now has not pushed oil above $80. Compared with before, the market's worry has clearly eased, which indirectly reflects that the odds of a large-scale conflict are not high. We can treat crude as an important gauge: $80 is the first watershed, while a fresh break above $100 would mean geopolitical risk has once again become the market's main storyline.
$纳指100ETF(QQQ)$ $纳斯达克(.IXIC)$ $NQ100指数主连 2609(NQmain)$ $微型NQ100指数主连 2609(MNQmain)$ $标普500(.SPX)$ $标普500ETF(SPY)$ $SP500指数主连 2609(ESmain)$ $微型SP500指数主连 2609(MESmain)$ $道琼斯(.DJI)$ $道琼斯指数主连 2609(YMmain)$ $微型道琼斯指数主连 2609(MYMmain)$
Beyond crude, another asset with reference value is the crypto asset we highlighted last week. Bitcoin did not see a large pullback under the weekend's "bearish" news; on the weekly chart it instead shows signs of stabilizing and building a base. As a leading indicator, if Bitcoin can hold the key 60k / 57k range in the short term, it will help dispel the market's current worry about a fresh round of safe-haven demand. If Ethereum can break above 1851, it would further benefit risk assets.
$美国原油ETF(USO)$ $WTI原油主连 2608(CLmain)$ $小原油主连 2608(QMmain)$ $天然气主连 2608(NGmain)$
$CME比特币主连 2607(BTCmain)$ $1倍做空比特币期货ETF-Proshares(BITI)$
$以太坊ETF-iShares(ETHA)$ $以太坊(ETH.USD.HKCC)$
After stripping out the main influencing factors, the overall conclusion is relatively clear. The more optimistic scenario is that Trump again concedes via a "verbal victory," with Iran reopening the strait — though similar episodes may of course recur afterward. The less ideal scenario is that the conflict does not escalate further, but the Strait of Hormuz stays blockaded for an extended period. If the latter lasts more than a month, inflation pressure will hit all kinds of assets, and could also bring the U.S.–Israel action timeline forward by 1 to 2 months.
Under this overarching logic, the main trading directions need no adjustment for now. Strong instruments are still mainly to be bought on dips / played to the upside, while most other assets may continue in a range-bound manner into the fourth quarter — the key is to wait for more cost-effective trading opportunities.
On strategy: the previously long euro futures were filled at 1.1420. Over the past two weeks the exchange rate has moved little, so no adjustment for now. Stop-loss and targets remain unchanged: stop below 1.1300, targets at 1.1770 and 1.2420 respectively (half position each).
$欧元主连 2609(EURmain)$ $欧元指数(EURindex.FOREX)$ $美元指数(USDindex.FOREX)$
On crude: with the long orders at the 70 level filled, all pending orders are now complete, with an average long entry of 75. Although the news drove a short-term rebound, no substantive change has occurred, so the original plan stands: stop-loss at 60, targets at 95 and 115 (half position each).
Last week's pending orders on crypto assets did not get filled; the low-level pending orders are cancelled for now, waiting to see whether a shorting opportunity above 2100 appears.
No new trading plans this week, but one can watch for rebound opportunities in precious metals (gold, silver), where the strategy is still mainly to short into strength.
P.S. If a trade reaches its first target, the stop-loss will automatically be moved up to the entry price; if there are any strategy adjustments after a fill, they will be updated in a subsequent article.
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