**Phase 0 - Pre-ceasefire escalation** Conflict intensifies, uncertainty peaks. Market sells off or becomes highly volatile. Short interest builds as traders expect more downside.
**Phase 1 - Rumors / anticipation of ceasefire** Leaks or diplomatic signals emerge. Smart money begins covering shorts quietly. Early buyers position for a potential relief rally.
**Phase 2 - Ceasefire announced** Headline hits. Optimistic buying spikes, but larger players may short into the strength, knowing the deal is fragile.
**Phase 3 - Ceasefire breaks / violence resumes** News confirms breakdown. Market drops sharply. Shorts from Phase 2 profit. Late longs get trapped.
**Phase 4 - Short covering begins** Profit-taking on shorts + bargain hunting. Price stabilizes, then starts to rise. Volume may increase.
**Phase 5 - Ignore bad news** Despite ongoing violence or truce confusion, market trends upward. New investors chase momentum, believing the worst is over.
**Phase 6 - Overextended / complacent** Price reaches resistance, sentiment too bullish. Shorts begin to rebuild positions quietly.
**Phase 7 - Repeat** Next catalyst (or lack of one) triggers the next leg down. Cycle resets.