Relevance up to 09:00 2022-07-15 UTC–4
The wave marking of the 4-hour chart for the euro/dollar instrument became more complicated after the quotes fell by almost 300 basis points last week. Thus, a successful attempt was made to break through the 261.8% Fibonacci level, which was also the low of the waves E and b. Now it is clear that these waves are not E and b, but the market sentiment comes first in importance. We had an excellent, promising wave layout just a week ago, which contained a classic five-wave descending structure. Instead of building at least three correction waves up, the market preferred to resume selling the instrument, indicating the secondary importance of wave analysis. Now we have one correction wave marked with a red line, and the instrument can build a new five-wave descending series. I recommend paying attention to the lowest wave order now because wave marking looks very difficult on a larger scale. If the current wave markup is correct, then the decline in quotes continues within wave 3. Wave 4, which could have started its construction yesterday, has been canceled.
The euro broke through price parity with the dollar.
The euro/dollar instrument declined by 110 basis points on Thursday. Yesterday, a report on inflation in the United States was released, which I recommended paying close attention to. As it turned out, not in vain, since this report has changed a lot in the market. In particular, a correction wave could have started its construction yesterday, which required increased demand for the euro. And this could happen if inflation showed a slowdown. But it did not show and rose to 9.1% y/y, which was higher than market expectations. Towards Wednesday evening, the European currency still managed to rise slightly, but already that evening, the demand for it began to decline again, and now the instrument has broken through its last low and, for the first time in many years and decades, has fallen below the 1.0000 mark.
There is no news background on the European Union and the USA today. But this does not prevent the market from continuing to reduce demand for the euro and raise the dollar. The current wave marking is being worked out perfectly so far, and the targets of the descending wave set are up to 94 figures. It is up to this level that the euro currency may fall over the next weeks if the foreign exchange market does not change. But it’s very difficult for me even to guess what might change. The ECB and the Fed continue to stick to their plans. The Fed is aggressively raising interest rates, and the ECB is not doing anything. The military-political conflict between Ukraine and Russia persists. Europe is on the verge of a gas embargo, with this already on the part of Russia. The situation remains very complicated and “acute,” and at the same time, unstable. No one can say what will happen in a few weeks, and the market prefers to transfer its assets to the most stable currencies at such times. The dollar is such.
Based on the analysis, I conclude that the construction of the downward trend section has been resumed and continues. If so, it is now possible to sell the instrument with targets near the calculated mark of 0.9397, which equates to 423.6% Fibonacci, for each MACD signal “down,” counting on the construction of waves 3 or 5. An unsuccessful attempt to break through the level of 323.6% will indicate the temporary unavailability of the market for new sales and the construction of corrective waves 4. But I think the attempt will be successful.
At the higher wave scale, the wave marking of the descending trend segment becomes noticeably more complicated and lengthens. It can take on almost any length, so I think it’s best to isolate three and five-wave standard wave structures and work on them.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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