The wave counting of the 4-hour chart for the EUR/USD currency pair remains the same and so far does without making changes. The assumed wave b took a longer form due to the decline at the end of last week, and this is very bad for the current count, since wave b has already turned out to be too deep compared to wave a. Therefore, the corrective wave b can go below the low wave a, and in this case the entire downward trend section can resume its construction, which will significantly complicate the entire wave counting. So far, I consider this scenario as a backup, but the decline in the quotes of the instrument in recent weeks makes me treat it more carefully. If the quotes successfully break through the 0.0% Fibonacci level, then the entire wave picture will have to be revised. That is why I do not recommend buying the instrument until the confirmation of the markets' intentions to buy the European currency appears.
The news background for the Euro/Dollar instrument was very strong on Thursday, but it was expressed only by the Fed meeting and its results. The US central bank decided to leave the key rate in the range of 0-0. 25% and the size of the QE program is $120 billion per month. Thus, the main parameters of monetary policy have not changed. However, the markets were not interested in this data, but rather in the rhetoric of Jerome Powell, who could announce specific deadlines for the completion of the QE program. He named them the middle of 2022, but with the note "probably." At the same time, the Fed chair did not give a clear date when the tapering of the stimulus program will begin, limiting himself to the phrase "probably in the near future."
However, the markets did not like the interpretation of "the near future" too much. The demand for the US currency increased for a short period of time, but the dollar managed to add only 30 basis points for it. Therefore, the picture above does not even really show any serious changes that could be after such an important event as the Fed meeting. Nevertheless, there were some positive moments. So, half of the Fed members predicted that rates would be raised next year, and Jerome Powell hinted that the tapering of the QE program could begin as early as November. The FOMC forecast for GDP for 2021 indicates a growth of 5.9%, and not by 7.0%, as it was at the last meeting. Thus, there were positive, but there were also negative moments, and it is probably fair that the exchange rate of the instrument did not suffer any serious changes after the Fed meeting.
Based on the analysis, I conclude that the construction of the downward wave b may be completed soon. Therefore, I still expect an increase in the quotes of the instrument and advise buying with targets located near the 1.1965 and 1.2036 marks, which corresponds to 50.0% and 61.8% Fibonacci levels. As a confirmation of this assumption, we can wait for a successful attempt to break through the 23.6% Fibonacci level or an unsuccessful attempt to break through the 0.0% Fibonacci level. I do not advise buying the instrument without confirmation, since the downward wave may take an even more complex form and then the entire wave count may change.
The wave counting of the higher scale looks quite convincing. We see three three-wave sections of the trend, which are approximately the same in size. However, the last section of the trend quite unexpectedly took a more complex form, but it still ended in the same place as the previous three-wave section.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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