🔹 Market Commentary

The market welcomed two major bullish headlines:

  1. A ¥1 trillion outright reverse repo injection.
  2. A high-level diplomatic call between major global leaders.

This comes right after coking coal’s rally, giving bulls some much-needed momentum. On the surface, things look great. But let’s break it down.

🔸 What We Saw Overnight

Yes, prices surged. But look closer — the rise was mainly fueled by short covering. Open interest fell, even as volume increased. That’s a classic sign of a position-exit-driven rally, not a solid, conviction-based breakout.

We’ve seen this before: the last time a ¥1T stimulus came (via RRR cut), the rally lasted just one day, peaking at a 30–50 point gain. This round might be more emotional than structural.

🔸 Our View

This is still a rebound, not a reversal.
The broader downtrend remains intact, and the market has not broken out of key resistance.

Key resistance to watch: 3050.
Unless we see strong follow-through and real demand-side improvement, our core strategy remains: Sell on strength.

🔸 Trading Strategy

Let the market breathe — don’t chase. If prices approach 3050 without new bullish catalysts or strong fundamentals, it’s a prime zone to rebuild short positions.

📌 Daily insights provided by LangZo Steel. For reprints, please credit LangZo Steel.