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The wave analysis of the 4-hour chart for the EUR/USD pair remains unchanged. We are currently observing the construction of the presumed wave 3 within wave 3 or c of the descending trend segment. If this is the case, the decline in quotes will continue for quite some time, as the first wave of this segment completed its construction around the 1.0450 mark. Therefore, the third wave of this trend segment should end below it.
The 1.0450 mark is the target only for the third wave. If the current downward trend segment becomes impulsive, we can expect five waves in total, and the euro could decline below the 1.0000 mark. Undoubtedly, it is quite difficult to expect such a development now; however, over the past years, there have been enough surprises in the currency market. Anything is possible.
Is there a probability of changing the wave analysis? It always exists. However, if we have observed a new upward trend segment since October 3 of last year, the previous downward wave does not fit into any structure. Therefore, an upward segment is possible only with a strong complication of the wave analysis. In recent weeks, the pair has only been rising, threatening the integrity of the wave picture.
The prospects for the dollar remain favorable, but the market has a different opinion.
The EUR/USD pair rate decreased by 20 basis points on Thursday and increased by 65 on Wednesday. As I mentioned yesterday, it is difficult to interpret the US inflation report against the US currency unambiguously. The market likely used it as a formal reason for buying the pair. The corrective upward wave has taken on a too elongated form but still has a chance to complete its construction around the 1.0880 mark, corresponding to 61.8% according to Fibonacci. The unsuccessful attempt to break this mark indicates a slight desire of sellers to enter the market.
Today, the US received new important information about the state of the economy, which has been confidently "cooling" over the past two quarters. Approved applications for new home construction were below market expectations - 1.44 million. The number of new home constructions was below market expectations - 1.36 million. The Philadelphia business activity index was significantly below forecasts - 4.5 points. Everything indicated that the demand for the dollar should only decrease today, but perhaps the moment has come when the US currency will start to make up for lost ground.
Honestly, it's hard to believe in it yet. The past month has shown that the market is not ready to invest in the dollar, even if the news from the US is positive or "hawkish." There was indeed some positive news, but the Fed members once again assured the market that monetary policy easing can be forgotten in the near future. This is a weighty reason for the strengthening of the US currency. I am still expecting a resumption of the downward trend segment.
General conclusions.
Based on the EUR/USD analysis, the construction of a downward wave set continues. In the near future, I expect a resumption of the construction of an impulsive downward wave 3 within wave 3 or c of a significant decrease in the pair. I expect a favorable moment for new sales with targets around the calculated mark of 1.0462. The unsuccessful attempt to break the 1.0880 mark, equivalent to 61.8% according to Fibonacci, may indicate the market's readiness for new sales.
On the larger wave scale, the presumed wave 2 or b, which in length exceeded 61.8% according to Fibonacci from the first wave, may be completed. If this is indeed the case, then the scenario with the construction of wave 3 or c and the decline of the pair below the 4-figure mark has begun to be implemented.
The main principles of my analysis:
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