The wave counting on the 4-hour chart for the euro/dollar instrument remains unchanged. Market activity as a whole remains rather weak, although the instrument gained 65 basis points last Friday. However, on Monday everything returned to normal and the range did not exceed 17 points. The quotes dropped below the previous wave's low, so now we can definitely conclude that the downward trend has transformed into a five-wave structure of the a-b-c-d-e type. If this is true, then the last wave e has already been completed. Since the attempt to break through the 1.1704 mark, which corresponds to 100.0% Fibonacci, was unsuccessful, this indirectly confirms the readiness of the markets to complete the downward wave. Thus, I believe that the construction of a new upward trend section has already begun, and its targets are located above the current levels by 500-600 points. A new upward trend segment can turn out to be either three-wave or five-wave.
Last Friday, the news background for the euro/dollar instrument remained extremely weak, and on Monday it was completely absent. Nevertheless, one report created a rustle on the foreign exchange market. On Friday, at the end of the working day, the US consumer confidence index from the University of Michigan was released, which was unexpectedly much weaker than market expectations. I cannot say that it was precisely because of the weakness of this index that the dollar fell on Friday, nevertheless, it supported the general sell-off of the dollar. As you can see, today the markets have calmed down about this disastrous index, and the dollar was even able to slightly increase during the day. Thus, nothing terrible happened for the US currency. Even the growing number of cases in America is not very worrisome for the markets right now. Nevertheless, vaccines already exist in the world, and the death rate from the virus has significantly decreased, the borders of most of the countries of the world have been opened. Thus, the coronavirus is now receiving the same attention as seasonal flu. At least, it is not very noticeable that it somehow influenced the quotes of the euro/dollar instrument. Nevertheless, I would not write off this factor. Nevertheless, if America is swept by a new wave of the epidemic, this could negatively affect the pace of recovery of its economy. In turn, the Federal Reserve may decide to extend the duration of the stimulus program, and the markets are now eagerly awaiting the central bank's readiness to complete the purchase of assets. Therefore, the virus may well have a negative impact on the economy and monetary policy, which will be transmitted to the dollar.
Based on the analysis carried out, I conclude that the construction of the descending section could have been completed near the 1.1704 mark, which equates to 100.0% Fibonacci. A successful attempt to break through this level will indicate that the markets are ready for more short positions on the instrument. In this case, the entire downward trend section may take on a more complex and extended form, and the instrument can be sold with targets near 1.1551, which corresponds to 127.2% Fibonacci. Until this happens, I recommend buying the instrument.
Major scale wave counting looks quite convincing. We see three three-wave sections of the trend, which are approximately the same in size. However, the last part of the trend quite unexpectedly began to take on a more complex form, but it could end in the near future.
