What movement will the new week begin with? I believe this question currently interests all market participants, as no one understands what actions Donald Trump plans to take. Initially, the American president set a five-day deadline for Iran. Then he extended it to ten days. During this time, Iran was supposed to "gather itself" and sign agreements with the US, the terms of which remain unknown. Additionally, it was expected that the Strait of Hormuz would be unblocked. As of April 5 (a day before the deadline), Iran has made no official statements. Therefore, one can conclude that Trump's conditions, if not rejected, have also not been met. Thus, at the beginning of the new week, markets may anticipate a new escalation of the military conflict in the Middle East.
What will this new escalation cause? In my opinion, the answer is obvious: a new rise in oil and gas prices and a renewed strengthening of the US dollar. The classic news background will be of little significance to market participants. What can traders focus on next week? The US will release a considerable amount of interesting reports, while the Eurozone will have a few less significant ones. But what kind of reaction should be expected to these events, considering that on Friday the market paid no attention to the Nonfarm Payrolls and unemployment data?
Based on all of the above, I believe that next week's movements will be entirely dependent on geopolitical factors. Trump may order strikes on Iran as early as today. Therefore, Monday could be quite "hot." If a new escalation occurs, demand for the US currency will rise again, and the wave analysis of the EUR/USD instrument will hold little relevance. Of course, Trump could implement the TACO principle, but the White House leader has rarely resorted to it lately. I believe that the escalation of the conflict in the Middle East is inevitable.
Wave Picture for EUR/USD:
Based on the analysis of EUR/USD, I conclude that the instrument remains within an upward segment of its trend (bottom image) and, in the short term, has completed its downward wave structure. Since the five-wave impulse structure is complete, my readers can expect price increases over the coming week, with targets around 1.1666 and 1.1745, corresponding to 38.2% and 50.0% on the Fibonacci scale. Further movements of the instrument are entirely dependent on events in the Middle East.
Wave Picture for GBP/USD:
The wave picture for the GBP/USD instrument has become clearer over time, as I had anticipated. We now see a clear five-wave bearish structure on the charts with an extension in the third wave. If this is indeed the case, and geopolitics does not cause another crash in the instrument shortly, we will see the formation of a minimum three-wave corrective structure, within which the pound could rise to the levels of 1.3429 and 1.3512, corresponding to 38.2% and 50.0% on the Fibonacci scale from the last bearish wave set. Therefore, in my opinion, now is a good time to buy.
Key Principles Of My Analysis:
- Wave structures should be simple and clear. Complex structures are difficult to work with and often entail changes.
- If there is no confidence in what is happening in the market, it is better not to enter it.
- There is no such thing as absolute certainty in market movement directions, and there never can be. Always remember to use protective stop-loss orders.
- Wave analysis can be combined with other types of analysis and trading strategies.
