- Rising Geopolitical Tension between U.S. and Russia
The geopolitical tension between the United States and Russia escalated rapidly in the past two weeks. Two weeks ago, the U.S. Treasury Department announced fresh sanctions against Russian oligarchs and companies due to “Russia’s malign activity around the globe”. This new sanctions have caused economic pain to Moscow with Russian Ruble and MOEX benchmark index plunging.
The tension between the two countries escalated further after the use of nerve agent to poison a Russian ex-spy and his daughter in England in March, which is blamed on Russia. This then follows the alleged chemical weapons attack at the town of Douma in Syria on April 4 by the Assad’s regime. More than 80 civilians were reported dead and hundreds suffered symptoms consisted with reaction to a nerve agent chlorine and sarin. President Trump condemned the attack to Assad, Russia, and Iran in his personal tweet and threatened a big price to pay
The verbal exchange continued as Russia responded by saying they could shoot down missiles from the United States if they attack Syria. President Trump in turn followed up in his tweeter:
Late last week President Trump seemed to dial back from his threat of imminent strike, perhaps as criticisms come that he should not tip this kind of decision in social media as it will eliminate any element of surprise. Or perhaps President Trump wants to wait for the weekend to carry the strike to reduce the impact on the market and allows market participants to digest the development without over-reaction.
War Breakout in Syria
Over the weekend however, President Trump followed up on his threat. The coalition forces of the United States, U.K, and France launched a precision military strike in Syria. The strike was limited in scope and target three Syrian chemical weapons facilities. The U.S. was particularly focused on targets which do not involve Russian forces in Syria and reduce the risk of civilian casualties.
The military action was designed to be limited in scope to deter the use of chemical weapons. The U.S and its allies do not want to get involved in the civil war which has raged for years in Syria involving militias, terrorist groups, and other world powers. It remains to be seen if the goal could be achieved and it will be interesting to see the global market’s reaction when it opens next week.
Gold’s Technical View
Gold traditionally is seen as a a safe haven instrument in times of uncertainty and turmoil. Technically, the long term technical picture appears bullish and the current geopolitical turmoil could be the catalyst needed for the next leg up
Gold vs Yen (XAUJPY) Technical Chart
Weekly chart of XAUJPY above shows that the instrument has been trading in sideways triangle Elliott Wave structure for 5 years since year 2013. Triangle is typically a continuation structure. and as the previous trend before 2013 is higher, it’s likely to resume higher again once the sideways consolidation is complete
Gold vs USD (XAUUSD) Technical Chart
Weekly chart of XAUUSD above shows that the metal has ended cycle from 2011 peak, as seen in the break above the trend line. In addition, it has formed a 5 year base, an inverse head and shoulder like pattern. In the near term, it has not been able to break the neckline, but a break above 1/25/2018 peak ($1366) should give signal the next leg higher has started.
Gold 5 swing bullish sequence from 2016 low
In addition to the weekly chart which shows a 5 year basing pattern, XAUUSD daily sequence chart above also shows a 5 swing sequence from 2016 low, favoring further upside towards $1451 – $1529 area to complete 7 swing double three Elliott Wave Structure (WXY), provided that pullbacks stay above 12.2017 low ($1236.66). Please note that the number on the chart represents on the swing count, not an Elliott Wave count.
Become a Successful Trader and Master Elliott Wave like a Pro. Start your Free 14 Day Trial at - Elliott Wave Forecast.
FURTHER DISCLOSURES AND DISCLAIMER CONCERNING RISK, RESPONSIBILITY AND LIABILITY Trading in the Foreign Exchange market is a challenging opportunity where above average returns are available for educated and experienced investors who are willing to take above average risk. However, before deciding to participate in Foreign Exchange (FX) trading, you should carefully consider your investment objectives, level of xperience and risk appetite. Do not invest or trade capital you cannot afford to lose. EME PROCESSING AND CONSULTING, LLC, THEIR REPRESENTATIVES, AND ANYONE WORKING FOR OR WITHIN WWW.ELLIOTTWAVE- FORECAST.COM is not responsible for any loss from any form of distributed advice, signal, analysis, or content. Again, we fully DISCLOSE to the Subscriber base that the Service as a whole, the individual Parties, Representatives, or owners shall not be liable to any and all Subscribers for any losses or damages as a result of any action taken by the Subscriber from any trade idea or signal posted on the website(s) distributed through any form of social-media, email, the website, and/or any other electronic, written, verbal, or future form of communication . All analysis, trading signals, trading recommendations, all charts, communicated interpretations of the wave counts, and all content from any media form produced by www.Elliottwave-forecast.com and/or the Representatives are solely the opinions and best efforts of the respective author(s). In general Forex instruments are highly leveraged, and traders can lose some or all of their initial margin funds. All content provided by www.Elliottwave-forecast.com is expressed in good faith and is intended to help Subscribers succeed in the marketplace, but it is never guaranteed. There is no “holy grail” to trading or forecasting the market and we are wrong sometimes like everyone else. Please understand and accept the risk involved when making any trading and/or investment decision. UNDERSTAND that all the content we provide is protected through copyright of EME PROCESSING AND CONSULTING, LLC. It is illegal to disseminate in any form of communication any part or all of our proprietary information without specific authorization. UNDERSTAND that you also agree to not allow persons that are not PAID SUBSCRIBERS to view any of the content not released publicly. IF YOU ARE FOUND TO BE IN VIOLATION OF THESE RESTRICTIONS you or your firm (as the Subscriber) will be charged fully with no discount for one year subscription to our Premium Plus Plan at $1,799.88 for EACH person or firm who received any of our content illegally through the respected intermediary’s (Subscriber in violation of terms) channel(s) of communication.