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25.01.2023 08:24 AM
EUR/USD. Analysis for January 25. Statistics from the European Union again prevented the euro from falling.

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The wave marking on the euro/dollar instrument's 4-hour chart is still quite compelling and getting more intricate, and the entire upward segment of the trend is still quite convoluted. Although its length is better suited for the pulse portion, it has taken on a powerful corrective and extended form. The waves a-b-c-d-e have been combined into a complicated corrective structure, with wave e having a form that is far more complex than the other waves. Since the peak of wave e is substantially higher than the peak of wave C, if the wave markings are accurate, construction on this structure may be nearly finished. I'm still planning for a decline in the instrument because we are predicted to build at least three waves down in this scenario. The demand for the euro currency increased in the first three weeks of 2023, and during this time the instrument only managed to move marginally lower from previously established levels. A new attempt to surpass 1.0721, which according to Fibonacci amounts to 200.0%, was successful, allowing the wave e to take on an even longer form. Unfortunately, there is another delay in starting to build the trend correction part.

The euro is making every effort to maintain its part of the trend.

On Tuesday, the euro/dollar instrument rose by 15 basis points, and the instrument's amplitude was extremely small throughout the day. I think that all of yesterday's movements were just "market noise." Movements of 20–30 points in a variety of directions cannot be interpreted by me as a market response to news or deliberate market activity. It is still true that there is a stagnant increase in demand for US cash. If you pay close attention to the news context, there can be no justification for the market to raise its demand for the dollar. For instance, business activity indices in the US continued to be below the critical value of 50.0. On the other hand, when compared to the data from a month ago, all three indices have increased. In other words, the market could have raised the demand for the dollar but chose not to. If you ignore the fact that two of them stayed below 50.0, the European business activity indices also turned out to be rather strong. But because the statistics were so vague, the market could give them its interpretation. In recent months, it has taken an interest in purchasing euro currency. Another day has passed when, if not an increase, then certainly a decline in demand for the euro.

We can assume that the market paid no attention to this news if we think back to the instrument's overall amplitude. The market seems to be anticipating meetings for the coming week. Before the meetings, perhaps the euro will even be able to increase a little bit further. However, if the increase persists after them, it will be even more challenging to discuss rational movements. Corrective waves, which we frequently saw at the start of the rising trend section, are now completely absent.

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Conclusions in general

I conclude that the upward trend section's building is about finished based on the analysis. As a result, given that the MACD is signaling "down," it is now possible to contemplate sales with goals close to the predicted mark of 1.0350, or 261.8% per Fibonacci. The potential for complicating and extending the upward portion of the trend remains quite strong, as does the likelihood of this happening. The market will be ready to finish the wave e when a bid to break through the 1.0950 level fails.

The wave marking of the descending trend segment notably becomes more intricate and lengthens at the higher wave scale. The a-b-c-d-e structure is most likely represented by the five upward waves we observed. After the construction of this portion is complete, work on a downward trend segment can start.

Chin Zhao,
Especialista em análise na InstaForex
© 2007-2023
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