The wave marking on the 4-hour chart for the euro/dollar instrument became more complicated following last week's decline of nearly 300 basis points. Thus, the Fibonacci level of 261.8%, which was also the low of waves E and b, was successfully breached. Now that it is evident that these waves are not E and b, market sentiment has assumed the position of utmost importance. A week ago, we had an excellent, promising wave structure consisting of a standard five-wave descent. Instead of constructing at least three upward correction waves, the market preferred to resume selling the instrument, indicating that wave analysis is currently of secondary importance. On occasion, the market completely disregards a particular type of analysis. There are instances in which distinct types of analysis produce contradictory results, one of which is incorrect. The most important thing is to recognize and act on the new market realities. Now that we have one red-lined correction wave, the instrument can construct a new five-wave descending series. I recommend paying close attention to the lowest wave order now, as wave marking appears to be challenging on a larger scale.
On Tuesday, the instrument's decline continued.
The euro/dollar pair increased by 10 basis points on Tuesday, but it approached the 1.0000 level the day. The increase did not begin until the afternoon, which I explained by activating pending purchase orders near price parity. Thus, the increase in the value of the European currency may be very temporary. Orders to be filled are positive, but in recent weeks I have observed a frantic demand for the dollar, so the US currency may resume its ascent after a brief pause. This indicates a fresh decline for the euro/dollar pair.On Tuesday, there was no news background. There was no significant news or report during the day. Notwithstanding, the market continued to reduce demand for the euro, resulting in a decline to 1.0000. The instrument last reached this level more than two decades ago. Nonetheless, it should be noted that the instrument attempted without success to break through the 323.6 percent Fibonacci level. Then, within the next few days, the construction of a new corrective wave 4 as part of a five-wave structure may commence. Considering the magnitude of the second corrective wave, I anticipate that wave four may conclude around the 1.0230 level. Or, today or tomorrow, the market will make a successful attempt to surpass the 323.6% Fibonacci level, wave 3 will assume a longer shape, and wave 4 will begin construction later. Regardless, the current market sentiment remains "bearish." Does the tomorrow-to-be-released report on American inflation determine whether wave 3 will end immediately?
General conclusions
Based on the analysis, I conclude that construction of the downward trend section has resumed and is ongoing. If this is the case, it is now possible to sell the instrument with targets near the estimated 0.9988 level, which corresponds to 323.6% Fibonacci, for each "down" MACD signal, based on the formation of waves 3 or 5. A successful attempt to break through the 323.6% level will signal to maintain open sales positions with targets near 0.9395, corresponding to a Fibonacci extension of 423.6 percent.
At the larger wave scale, the wave marking of the descending trend segment becomes noticeably more complex and extends in length. It can assume almost any length, so I believe it is best to isolate and focus on three and five-wave standard wave structures at this time.
