The US midterms are approaching, and Donald Trump still does not want to escalate the war with Iran before the congressional vote. At the same time, he is desperately trying to push diesel prices down. He cannot lower fuel costs, so his tactic is to promise the American people a fantastical future: "Vote for the Republicans and the war with Iran will end soon and fuel prices will collapse." In fact, Trump has promised a quick end to the Iran conflict for eight months now, so American voters must decide whether to believe him this time.
The same goes for his promises of a "sunny future." Trump says that if Democrats win, all the results and achievements of his administration will be erased. In my view, that rhetoric further reduces the Republicans' chances. Put another way, it is hard to point to many clear positive outcomes from two years of his rule: prices are rising, inflation is accelerating, fuel costs have roughly doubled, most people do not see the need for a war with Iran, the national debt has increased by $3 trillion, the US budget remains in deficit, and the trade balance is negative.
Certainly one can list Trump's claimed wins—control over Venezuelan oil, access to Greenland, increased energy exports, ending eight wars, attempts to broker peace between Ukraine and Russia—but how do these achievements help ordinary Americans? In practice Americans are paying for these so-called victories, and many of them do not benefit the public.
On Sunday, October 25, Trump once again said he must make a decision on Iran soon: either resume missile strikes or sign an agreement. That is an interesting—and, crucially, a new—statement. In reality Trump has been "deciding" about Iran for two months. New missile strikes are unlikely to solve anything. A deal with Iran would require substantial US concessions. So in my view the decision has effectively already been made—and it looks like another senseless escalation. Attacks on Iran could resume immediately after the midterms.
Other articles to read:
EUR/USD analysis. October 26. EUR at crossroads
Wave picture for EUR/USD
Based on my EUR/USD analysis, I conclude the instrument remains within a global corrective A-B-C-D-E segment. However, that structure now looks fully formed and may be complete. In my view this is a good time not only to buy the euro but also to expect a full bullish leg of the trend. On the higher timeframe, one should expect a rise to at least the 1.17–1.18 area. The failed breakout at 1.1126, which equals 50.0% on Fibonacci (lower chart, higher timeframe), also points to market readiness to buy.
Wave picture for GBP/USD
The wave picture for GBP/USD has acquired a fairly clear shape. Charts show a distinct A-B-C corrective structure that may be complete. A similar structure in EUR/USD may also be finishing. If that assumption is correct, sterling has completed the decline that puzzled many traders in recent weeks. In that case the pound could begin not only a corrective wave but also a full bullish leg with targets above the peaks of waves B and D—in other words, above the 1.37 area. I think now is a good time to build long positions.
Core principles of my analysis:
1) Wave structures should be simple and comprehensible. Complex structures are hard to trade and often change.
2) If you are not confident about what is happening in the market, it is better not to enter.
3) There is never 100% certainty about direction; do not forget protective stop-loss orders.
4) Wave analysis can be combined with other analytical methods and trading strategies.
