Last week, French President Macron said he had received assurances from Putin that forces conducting military exercises in Belarus would return to their bases and that the build-up of forces on the Ukrainian border would cease. However, Putin later denied those comments. On Friday, US Secretary of State Anthony Blinken said Russia was still gathering troops near the border and an invasion was imminent, possibly before the end of the Olympics. He told all American citizens to leave Ukraine immediately. On Sunday, it was reported that Putin had communicated his intention to move to Ukraine on Wednesday. If these reports are to be believed, safe-haven assets should be the beneficiaries leading to an invasion. These include instruments such as the Japanese yen, Swiss franc, bonds and gold. In addition, oil is also expected to remain in contention as fears of a lack of supply from Russia.

Markets got a taste of this price action last week when comments from the White House were released. EUR/JPY moved from over 132.00 to the 200-day moving average at 130.39. If the continued threat of invasion persists, the 61.8% Fibonacci retracement level from the January 27 lowsand at the heights of February 10and crosses below at 130.12. Support below is found at the 50-day moving average at 129.79, a confluence of support between 129.34 and 129.53, then the 25th January lowsand at 128.20.

Source: Tradingview, Pierre X

Gold also benefited from the press release. XAU/USD moved from 1827.4 to 1865.5, breaking through the upper and falling trendline of a long-term symmetric triangle. The first resistance is on November 21st, the 2021 highs at 1875.8. Above there is a confluence of resistance at the 127.2% Fibonacci extension from the November 21 highsst2021 to December 15th lowand2021, horizontal resistance, and the 61.8% Fibonacci extension from the August 2020 highs to the March 2021 lows between 1909.7 and 1923. If the price breaks through this range, the 161.8 Fibonacci extension % of the shortest period is at 1952.9.

Source: Tradingview, Pierre X

As mentioned, WTI Crude Oil also rose on Friday’s Russian headlines, from 91.12 to 94.63. In doing so, the price crossed a long-term ascending trend line near 94.00. If the headlines continue to be negative, there is a confluence of the 2014 horizontal resistance and the 161.8% Fibonacci extension from the October 25 highs.and2021 to December 2 lowsn/a, 2021 between 98.95 and 99.56. The 100.00 level also acts as a psychological resistance of the round numbers. Note that WTI broke the cleavage of a double bottom in mid-January. The double bottom target is near 108.10.

Source: Tradingview, Pierre X

If headlines rise that Russia will invade Ukraine this week, markets could see flows of risky assets into safe havens, such as the yen, Swiss franc, gold and bonds. Oil could also benefit from the headlines. However, history shows that during an invasion, one should beware of a “buy the rumour, sell the fact”, in which case prices would reverse and traders could be caught on the wrong side of the trade.

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