The wave marking of the 4-hour chart for the euro/dollar instrument has undergone certain changes. The upward section of the trend continues its construction, and now it takes a pronounced corrective form. Initially, I thought that three waves would be built up, but it is already clearly visible that there are five waves. Thus, we get a complex correction structure of waves (a-b-c-d-e). If this assumption is correct, then the construction of this structure may be nearing its completion since the peak of wave e exceeds the peak of wave C. In this case, we are expected to build at least three waves down, but if the last section of the trend was corrective, then the next one will most likely be impulsive. Therefore, I am preparing for a new strong decline in the instrument. A successful attempt to break through the 1.0359 mark, which corresponds to 261.8% Fibonacci, indicates the incompleteness of the last ascending wave.
The most important thing now is that the wave markings of the pound and the euro coincide. If you remember, I have repeatedly warned about the low probability of a scenario in which the euro and the pound will trade in different directions. Theoretically, this is certainly possible, but it rarely happens in practice. Now both instruments are presumably building corrective trend sections, which may be completed in the near future. Thus, the British dollar may also begin to decline within the framework of a new downward trend segment.
Christine Lagarde should have reported something interesting.
The euro/dollar instrument showed a low amplitude of movements on Thursday. The day was very calm, but the quotes of the instrument continued to be close to the expected peak of wave e. Thus, I am still determining if the construction of the entire upward section of the trend has been completed. ECB President Christine Lagarde did not say anything important in the previously scheduled speech. Consequently, there was no market reaction. In the US, a report on retail trade volumes was released yesterday. They grew by 1.3% monthly in October, which is higher than expected. At the same time, industrial production in the United States decreased by 0.1%, which is worse than expected. Thus, one report overlaps the other. The news background is important for the markets now, but there has been and will be little important news this week. Therefore, at this time, I rely more on wave marking, which assumes the completion of the construction of an upward trend either now or within a couple of days. Wave e has already taken on a rather extended form, and if it ends soon, the entire wave marking may take on a more complex form, which I would certainly like to avoid. So now, I still expect to build at least three waves down. Maybe after building this structure, a new upward trend section will begin to be built, but now we need several waves down.
General conclusions.
Based on the analysis, the construction of the upward trend section has become more complicated into five waves. It continues due to the inflation report and impartial statements by FOMC members. However, I can't advise buying now since the wave marking still needs to imply a further increase. I advise selling in case of a successful attempt to break through the 1.0359 mark with targets located near the estimated 0.9994 mark, which corresponds to 323.6% Fibonacci.
At the higher wave scale, the wave marking of the descending trend segment becomes noticeably more complicated and lengthens. We saw five upward waves, which are most likely the a-b-c-d-e structure. The construction of a downward trend section may resume after the completion of the construction of this section.
