The Elliott Wave count on the four-hour EUR/USD chart has become more complex. On the higher time frame (bottom chart), the downward trend segment has taken the form of a five-wave A-B-C-D-E structure, which could be completed at any time, as it appears structurally complete. All the waves in this segment are approximately equal in size, so I consider it corrective. If this assumption is correct, once the structure is complete, an impulsive upward trend segment will begin, with targets well above the 1.2000 level.

On the lower time frame (top chart), an impulsive wave sequence continues to develop, which may belong to wave E of the higher time frame. If this is indeed the case, then no matter how strongly the dollar rises, its appreciation is nearing an end. The presumed wave 5 of E is either complete or close to completion. In any case, the current wave structure suggests that the downward wave sequence is nearing completion on both charts. News developments and a sharp shift in market sentiment have driven substantial gains in the US currency, but few new reasons remain to support further dollar appreciation.

The Euro Continues to Decline

The EUR/USD pair declined by another 35 basis points on Tuesday, which probably no longer surprises anyone. I would like to point out that the decline in the European currency, which began approximately six to eight weeks ago, still raises serious questions for me. I could simply assume that the market is always right and list a range of factors that may be weighing on the euro, while ignoring the risks facing the US dollar. However, that is not my approach. When a market move looks unusual, I try to say so.

Today, the market had reasons to buy the dollar. The US durable goods orders report, which is considered a fairly important indicator, showed a 1.8% month-on-month increase in September, although markets had expected a more modest gain. However, the US currency had already risen by 35 points before the data was released. Following the release, demand for the US currency did not increase further. Once again, I can therefore conclude that economic data is not influencing market sentiment, or that certain particularly large market participants received the orders data before other participants did. In either case, this development could not have been anticipated, and the pair's intraday movements once again had little to do with the news flow.

In my view, the current trend is nearing exhaustion. Every day, the market seems increasingly compelled to find reasons why the dollar has risen again. The Fed will hold its meeting tomorrow evening, but this cannot explain the dollar's current gains. The ECB will meet the following afternoon, but this cannot explain the euro's latest decline either. Unrest in France and other EU countries has subsided, yet the euro continues to fall.

General Conclusions

Based on my EUR/USD analysis, I conclude that the pair remains within the broader corrective trend structure A-B-C-D-E. However, this structure appears fully developed and may therefore be complete. In my view, this is a favorable time not only to consider buying the euro but also to anticipate the development of a sustained upward trend segment. According to the higher time frame, the pair could rise to at least the 1.1700–1.1800 level. The failed attempt to break above 1.1126, corresponding to the 50.0% Fibonacci level (bottom chart, higher time frame), also indicates that the market may be preparing for a move higher.

The higher time frame shows a downward trend segment that has taken the form of an A-B-C-D-E structure. The internal wave structure of wave E has developed into a five-wave impulsive pattern, which may already be complete. If this assumption is correct, a new upward trend segment will now begin to develop.

The main principles of my analysis:

1. Wave structures should be simple and easy to understand. Complex structures are difficult to trade and often involve changes in the expected pattern.
2. If there is no confidence in what is happening in the market, it is better to stay out.
3. There can never be absolute certainty about the direction of price movements. Do not forget to use protective Stop Loss orders.
4. Elliott Wave analysis can be combined with other forms of analysis and trading strategies.