27.07.202608:29 Forex Analysis & Reviews: Key Topics for Monday, July 27

Donald Trump is preparing for a new truce with Iran. Most likely, the US President is forced to take this step for a variety of reasons. Firstly, new strikes, like all previous ones, have proven ineffective in pushing for a peaceful deal with Iran. It is Trump who passionately desires to conclude a "nuclear agreement" with Tehran; he initiated this conflict, so it is Trump who must make concessions and try to appease Iran. Naturally, the US President will not acknowledge this and will not take such a step. Publicly, Trump will emphasize his generosity, once again announcing negotiations with Iran.

Secondly, Trump's political ratings continue to decline, along with those of the Republican Party. This comes just months before the Congressional elections. Americans do not highly regard Trump's efforts in the Middle East or his attempts to "save the American nation from the Iranian nuclear threat." Instead, they view high gasoline prices and growing inflation very negatively. Therefore, the longer the war continues, the lower Trump's chances of maintaining full power in the country.

Thirdly, it has become clear that Iran is unafraid of war and is ready to fight for decades, which is clearly not in the plans of the American President. From any perspective, any new military aggression from the US towards Iran is simply senseless, as it does not bring the Strait of Hormuz closer to reopening, nor does it lead Iran and the US to peace, or Trump to a nuclear deal.

US Ambassador to the UN Mike Pence stated that Trump halted strikes on Iran to allow for a return to diplomacy. Do we believe it? Likewise, The Wall Street Journal reported that new strikes were canceled due to a shortage of Patriot air defense missiles. Experts estimate that since the onset of the war with Iran, the US has used about 1,500 Patriot missiles, and its remaining stock now stands at fewer than 1,000. In the event of a conflict with a more formidable adversary capable of striking US territory, the supply of interceptor missiles would not last even a week. I somehow believe this information more.

As a result, the war may once again pause, only to resume in a month. As I mentioned earlier, I expect a prolonged conflict without continuous active combat operations.

Wave Structure for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument remains within the upward segment of the trend, while in the short term it is within a downward segment of the trend. In my opinion, this is a good time to consider forming long positions. However, the instrument may still drop to the 13 figure within the context of wave 5 in C. Wave analysis often presents surprises, so I would start repositioning toward buying now.

Wave Structure for GBP/USD:

The wave pattern for the GBP/USD instrument has taken on a rather complex form. Currently, the instrument has constructed three waves down, while for EUR/USD, there may be five waves formed. Consequently, the pound may construct one more wave down, just like the euro, but this wave could be the second within a new upward segment of the trend. Thus, there will be divergence in the wave structures of the euro and the pound, but it will be insignificant. Based on this, the downward pullback may continue for some time, after which I expect wave 3 of the new upward segment of the trend to form, with targets located around the 37-38 figures.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often change.
2. If there is no confidence in what is happening in the market, it is better not to enter.
3. There can never be 100% certainty about the direction of movement. Don't forget about protective stop-loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.