The wave counting on the 4-hour chart is still fully comprehensible and has not undergone any changes in recent days. Thus, I conclude that at the moment, the construction of the downward trend section, which began in early January, is completed. Now the construction of the first wave of a new upward wave structure has begun and continues. If the assumption about the corrective form of the downward trend is correct, then the new upward part will turn out to be impulsive. Given the size of its first wave, it can be assumed that it will turn out to be quite extended. I also want to draw your attention to the fact that an attempt to break through the 50.0% Fibonacci level can hardly be considered successful. Consequently, now there is a high probability of building a second, corrective wave, with targets located 100-120 points below the current position of the instrument.
The news background for the Euro/Dollar instrument was rather weak on Wednesday. This is clearly seen in the amplitude of the instrument during the day, which did not exceed 20 points. Thus, neither Christine Lagarde nor Jerome Powell's speech had the desired effect on the markets. It should also be said that the presidents of the ECB and the Fed did not report anything new to the markets. Lagarde was once again very pessimistic, which is not surprising, since the European economy is contracting again instead of showing a confident recovery in the first and second quarters of 2021. According to the results of the first quarter, there may be a reduction of 1% of GDP. In the second quarter, everything will depend on whether the vaccination rate of the EU countries increases and the problems with the supply of vaccines is resolved. Also of no small importance will be the strength of the third wave of coronavirus, which is now raging again in some countries. So Christine Lagarde's comparison of the European economy with a postoperative patient who can only stand with two crutches (fiscal and monetary stimulus) looks very realistic. Powell, in turn, talked about the very high pace of economic recovery, but also admitted that stimulus is still needed, without which the pace can slow down. Also, the Fed chairman noted that in the near future, the program of buying up assets for $120 billion per month will continue and will not be reduced. Rates will rise much later than the moment when the bond buyback program is completed. Only 4 members of the Fed monetary committee believe that this moment will come in 2022, and 7 members said that in 2023, while 2021 is out of the question.
Based on the analysis, I still expect the construction of an upward trend. Since its first wave already looks quite convincing, and the attempt to break through the 50.0% Fibonacci level was unsuccessful, now the instrument quotes may begin to decline within the expected wave 2 or b. I recommend to resume buying the instrument after the completion of this wave with targets located around the 21st figure and above. Wave counting still takes precedence over the news background.
The wave counting of the upward trend section still has a fully completed five-wave form and is not going to get complicated yet. But the part of the trend, which began its construction immediately after it, takes a corrective, but quite understandable form. This part of the trend also looks quite complete.
