The wave counting on the 4-hour chart for the Euro/Dollar instrument is getting more complicated and may require adjustments and additions in the near future. Supposed wave 4 of the upward trend has already assumed a five-wave form and does not fit into the current wave counting anymore. Although, if we assume that the entire trend section, which begins on March 31, will not take the form 1-2-3-4-5, but a-b-c-d-e or a similar, corrective form, then any wave can be complicated as many times as necessary. Now I am still looking forward to building a new upward wave, be it 5 or e. However, a new decline in the instrument quotes under the low of the assumed wave e at 4 may lead to an even greater complication of the wave counting. The most important thing is that the demand for the US dollar remains rather weak, so the impulse wave cannot begin its construction in any way.
During Friday and Monday, the news background was very weak. However, it was on Friday that the instrument lost about 100 basis points, and today it is trying with all its might to restore these losses. If we consider wave 4, as a separate set of waves, it turns out that a five-wave corrective structure has formed, after which the construction of an ascending corrective structure at least must inevitably follow. Therefore, I continue to count on an increase in quotes in any case. However, this means that the news background this week should be mostly supporting the demand for the European currency, and not for the dollar. Today, the report on industrial production in the European Union marked the beginning of the week of the European currency. Production rose 0.8% MoM, although markets had expected growth of just 0.4%. However, this report was not the most important and strongest this week. A more important report on retail trade in the United States will be released tomorrow, and on Wednesday, the results of the FOMC meeting will be summed up. There will also be a lot of interesting events on Thursday and Friday, but I will discuss them later. So far, there may be a situation in which the markets will be very reluctant to trade the instrument until Wednesday evening. Unfortunately, this often happens before important events that can greatly affect the mood of the markets. At the moment, few people expect from the Fed to take active steps to change monetary policy. However, the consumer price index in the US continues to rise, which makes the markets nervous and appeals to the Fed, demanding explanations and concrete actions. Therefore, it is very likely that the markets will indeed wait for the Fed meeting, and until that time, the amplitude of the instrument will be very weak.
Based on the analysis, I still expect the instrument quotes to go up, although at this time the wave counting is already raising serious questions. I still recommend buying the instrument with targets located around the 23rd figure and the level of 1.2340 for each MACD signal "up", however, any new decline in quotes may lead to the need to make adjustments to the current wave counting.
The wave counting of the new upward trend is not entirely unambiguous. Initially, the area looked impulsive and it was logical after the construction of a three-wave corrective structure. However, now it may turn out that the last drop in quotes may be the beginning of a new corrective structure - a downward one. Or the entire upward trend will take on a five-wave correction.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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