The wave counting on the 4-hour chart for the Euro/Dollar instrument remains rather ambiguous. Nevertheless, the decline in quotes during the day led me to conclude that the expected wave c in the downward trend section has become more complex. The wave counting of recent months is such that any wave and any section of the trend can take on any lengthy and complex form. For example, there may be five waves inside the assumed wave c, and there may be several more internal waves inside any of these five waves. In such a situation, I recommend paying attention only to the waves of the higher scale. This, of course, is not the most ideal way to work, but note that wave countings must be understandable and clear so that you can work and earn money on it. Also, a lot will depend on the news background, which recently did not impress the markets too much and did not always force them to react.
The news background for the Euro/Dollar instrument was simply absent on Wednesday. During the day, there was not a single interesting report or other events that could affect the markets and their mood. In the morning, the European Commission released new data on forecasts for economic growth and inflation for 2021-2022. However, even though these forecasts were improved, the European currency lost about 20-30 basis points during the day. Therefore, even without reading the forecasts, we can conclude that the markets were not impressed with them. Nevertheless, I cannot but note that the forecast for GDP has grown to 4.8% in 2021 and to 4.5% in 2022. In terms of inflation, the European Commission expects a value of 2.2% this year and 1.9% next year. As I already said, in previous versions of the forecast, smaller numbers appeared.
However, the possible acceleration of inflation and GDP growth rates did not provide any support to the European currency. In general, the markets are now very closely monitoring the rate of inflation, and it should not be expected much higher than 2%. That is, inflation in America is already 5%, in the UK, representatives of the Bank of England are already talking about 3%-4% at the maximum, and in the European Union, they expect a maximum of 2.2% by the end of the year. Although high inflation is a negative phenomenon for any economy, nevertheless, its acceleration is now associated with the acceleration of economic recovery.
Based on the conducted analysis, I conclude that the construction of the downward wave continues, therefore, we can now consider selling the Euro/Dollar instrument. Thus, at this time, I recommend selling with targets located around 1.1701 and 1.1552, which corresponds to 100.0% and 127.2% Fibonacci for each MACD downward signal.
The wave counting of the new upward trend section is not entirely unambiguous, but at this time, it is presumably completed and has taken on a three-wave form. Thus, now I expect the construction of three downward waves, and the third wave can turn out to be almost any in length. At the same time, the trend section can take on a five-wave form.
