From April twenty-first, two thousand twenty-five to April twenty-second, two thousand twenty-five

I. Foundation

resistance to change and hence greater dependability for the results shown in the past.

II. Insights

Our Viewpoints and ideas on market.

Returning to FX markets and filling in the key question about the main driver of FX trading (a brief answer to why technical analysis also requires an understanding of macro, and why charts aren’t drawn at random)

Doubts about the dollar’s dominance as the global reserve currency are becoming one of the central topics of current market discussion. Although the use of the dollar remains higher than that of all other major reserve currencies(including the Australian dollar, Canadian dollar, renminbi, euro, British pound, yen, and Swiss franc) combined, but alternatives represented by gold or a basket of multiple currencies are rising significantly.

This is another pivotal week On the one hand, the market is approaching the limit of tolerance for intervention in major currencies On the other hand, the upcoming IMF meeting is expected to focus on concerns about U.S. Treasuries, including Fed independence, debates over fiscal spending and taxation, the dollar’s valuation, and cross-border investors’ willingness to allocate capital to U.S. assets.

Last week, market focus shifted from fixed income to equities, partly because of Q1 earnings reports and Q2’s outlook, but As trade talks with Japan and other countries coincide with the IMF meeting, the focus will return to the dollar and global FX markets themselves (gold trading is also FX trading in itself; it is directly matched against global sovereign fiat currencies, a logic we have emphasized many times on the Planet) (gold, sovereign fiat currencies/FX, and cryptocurrencies are essentially in the same trading pair)

For further reading: Notes250421 The divergence between Bitcoin and gold: starting with Zoltan’s perspective

Chart: Peter’s prediction from a week ago is becoming reality

For further reading: Weekly Wrap 250420

Finally, just a brief addition on FX trading, Another key is understanding which currency is the dominant pricing currency in a currency pair.This is the primary starting point for analysis and is useful not only for judgments about macro strategies, it can also help members of the group who are more skilled at using technical and chart analysis This is also why we often explain Even if you are a pure tech boy, you still need to understand some basic macro concepts before putting on a trade..

Here is an example that I hope will help:

The New Zealand dollar has just completed a classic but relatively rare broadening reversal pattern, This pattern almost always appears at a top rather than a bottom (a simple, orthodox technical-analysis theory: the same pattern can carry different meanings and probabilities at different trading ranges and positions; this is added here for readers who do not use technical analysis).

What needs to be noted here is that In this currency pair, the dollar is the dominant currency, so if it is expressed and charted as USD/NZD, it actually corresponds to a top...which also means greater certainty...At such a time, drawing the chart is not a matter of forming a view first and then using chart patterns to “find evidence” that you are right. Where it should be drawn is fixed!

This is also where technical analysis often goes wrong: the same setup,

if you want to draw a chart, you first need to know which chart to draw it on.

Then you can discuss the so-called pattern and the probabilities associated with its position.

2025.04.21

Why the decline in U.S. stocks is far from over

First, at least based on what we can see now, the U.S. stock market is nowhere near having reached a true bottom，Neither of the two key features—1) flush-out capitulation + 2) extreme excess buy flow—is present at all, so it is indeed too early to talk about the decline being over Within the medium-term trading horizon, we will continue to maintain a structurally bearish position (specific real-time U.S. futures trades will be posted simultaneously in the in-depth group, executed by Sean/https://www.meridianresearch.app/home?product=vega-trading), anyone willing to take the other side of our trades, please step forward.

This pullback in U.S. equities is the fourth major correction exceeding 15% for SPX since 2018, The first three occurred on 2018年12月24日, 2020年3月23日, and 2022年10月11日, respectively, and those three bottoms (as well as all previous market bottoms) shared the same market-trading characteristics:

Every true bottom has gone through a violent selloff + extreme net buying (flush-out capitulation + multi-sigma buy flow), rather than a “soft-landing”-style rebound driven by policy news Everyone should keep this statement firmly in mind!

Image: a positioning update we previously posted in our U.S. stocks group (https://www.meridianresearch.app/home?product=us-strategies）

It was very clear, The market is at the pain threshold, and so-called U.S. politicians are also at the pain threshold, which means all the news is bound to lean upward so, There is no need to wait for the details of the news, because the outcome and how it is framed are predictable; once prices move into a certain range, the corresponding news outcome will naturally follow。

Either go long before the news and hold until it is announced, or go short after the news has been absorbed. Since this round of selling began, every swing has followed this pattern, without exception. You can review the market moves for yourselves.

To quantify a bottom, look at the market behavior around previous bottoms as a reference, 1) a major selloff, 2) an intraday rebound of at least +5% after the selloff, and 3) the rebound accompanied by an extreme excess inflow of funds (2018年12月26日+840亿美元, 2020年3月24日+1450亿美元, and 2022年10月13日+1440亿美元).

To reiterate: a washout selloff + extreme net buying.

A bottom does not rebound because of good news; it is necessarily the result of market participants running out of sellers.

The 5370 billion-dollar buying on 4/9 was essentially low-quality money briefly lured into the market by the “tariff delay” news, rather than value buying after a “panic liquidation.”The news may even have artificially prompted speculative longs lacking conviction and forced shorts to cover, making the current market structure more fragile; this is another reason we have greater confidence in our view of a larger medium-term decline.

Systematic strategy capital (CTA, Risk Parity, Risk Control..) was still the first to sell this round, but the real pain has only just begun, Because the subsequent exit of slower-moving capital is the real key to crushing valuations. Unwind activity is now clearly less frequent and less intense than in previous rounds; the next phase may bring more concentrated passive deleveraging.

Retail investors have not yet reached a true “panic” phase—the bottoms on 2018/12/26, 2020/3/24, and 2022/10/13 all showed clear Sell the Dip behavior, but For now, this episode is still mainly about buying the dip. As in the previous three rounds, the true bottom does not come when retail investors buy the dip; it will come when they begin to “panic sell” en masse.

Options data also reveal a typically flawed structure, reflecting a low-conviction bullish thesis based on “fear of missing out” rather than “willingness to bear a drawdown.”Moreover, since the start of the year the Dollar Index -8.5%, foreign capital will flow back into domestic-currency assets, and most of the funds that bought U.S. stocks in large amounts last year ETF are now in loss—simultaneous pressure on the dollar and U.S. equities is only just beginning.

Stay patient and wait for the flush-out, but it certainly will not happen quickly; do not be too eager.

For now, at a minimum, we need a break below the News pivot at 4.7 before discussing anything else, A breakdown is certain; without one, the market will not panic (just like you), so it will definitely break down.If you are Mr. Market himself, how could you possibly beat yourself?

I’ll discuss only this one point today, leaving you time to review and do your homework. When there are no fish to catch, get some rest and spend more time with your family.

2025.04.22

III. Market Pulse

Our latest Comments on the economic and market environment

The divergence between Bitco and gold: starting with Zoltan’s view

Zoltan Pozsar’s latest view is quite interesting, so I’m sharing it with you at the start of this week. It may, to some extent, help you understand this divergence between BTC and gold.

He believes that the Bitcoin legislation Trump had repeatedly raised before was actually a clever, indirect way to push up gold prices without drawing the bond market’s attention.In other words, Bitcoin-related legislation (such as bringing BTC into the reserve system, tax exemptions, denomination and settlement, and so on),On the surface, it is meant to support crypto assets; in reality, it may be quietly creating legitimacy for higher gold prices.

Why call it “quietly”? Because if the government openly and directly bought gold or pushed up its price, the bond market would react immediately—meaning: 1) inflation expectations rise; 2) real interest rates fall; 3) Treasury prices come under pressure and financing costs rise;

This would disrupt overall financial stability and would be unwise, especially for a highly indebted government.

Gold is an anchor for long-term real interest rates and a boundary for the credit system. When government credit is overextended and inflationary pressures are hard to control, gold often becomes the anchor for repricing the monetary system.But if the market realizes that gold is being officially “repriced”: 1) the bond market will expect more monetary easing or weaker dollar credibility; 2) it will sell Treasuries in advance, pushing yields higher; 3) ultimately, this will undermine the government’s financing capacity.

To sum up Zoltan’s core point in one sentence: don’t be misled by appearances.Whether it is framed as “Trump supporters like BTC” or as politicians chasing votes, the real policy consequence is to pave the way for legitimizing and revaluing gold.

Bitcoin legislation is not simply about supporting BTC; it uses Bitcoin to pave the way for gold repricing—and doing so will not alert the Treasury market, making it a “structural strategic tool” for bypassing the traditional financial market’s response mechanism.

This is also why the two have shown an unusual pricing divergence even as discussion of the bill has intensified.

Chart: Gold’s upside breakout day was exactly BTC’s downside breakout day(The bill debate instead shorted BTC and went long gold)

Viewed from this angle, Then Confirmation of a rebound in BTC could coincide with a top in gold Likewise, A surge to a new high in gold could also bring fairly strong short-term downside risk for BTC These two developments are consistent with each other.

This is simply one perspective to watch; keep an eye on this chart going forward—it may be interesting. Be careful if the two converge.