The wave marking on the euro/dollar instrument's 4-hour chart still appears to be quite accurate, but the entire upward section of the trend is becoming more convoluted. It has already assumed a clear corrective and somewhat prolonged form. The waves a-b-c-d-e have been combined into a complex correction structure, with wave e having a significantly more complex form than the other waves. Since wave e is much higher than the peak of wave C, if the wave markings are accurate, construction on this structure may be nearly finished. In this scenario, we anticipate at least three waves of decline, but if the previous phase of the trend were corrective, the subsequent phase would probably be impulsive. Therefore, I am preparing for a new, significant decline in the instrument. The market's readiness for sales will be demonstrated by a failed attempt to surpass the 1.0726 level, corresponding to 200.0% of the Fibonacci sequence. However, the recent increase in the instrument's quotes suggests that the overall wave e may end up longer. The demand for US dollars is still not increasing, and the internal wave structure needs to be clarified. The wave pattern keeps getting more perplexing and intricate.
The US dollar has suffered a defeat.
On Wednesday, the euro/dollar instrument increased by ten basis points and by 100 the previous day. The adoption of such an extended form by wave e continues to surprise me. Of course, any wave can take on almost any length, which makes wave analysis significantly less advantageous. Sometimes you can estimate the size of a wave based on its structure, but in practice, things often turn out differently. As a result, I've been waiting for a few weeks for the construction of wave e and the entire upward section of the trend to be finished, but things keep getting trickier in practice.
Yesterday, there were undeniable causes for this. The market's expectations for the American inflation report turned out to be stronger (or weaker?) than expected, significantly decreasing demand for the US dollar and causing it to lose about 100 basis points in minutes. A significant drop in the consumer price index means that the Fed can immediately slow down the rate at which interest rates are increased at the start of the following year. Let me also remind you that the US dollar rose when the Fed started to raise rates, and the rate hikes started to accelerate. The market started to slowly decrease demand for the dollar as soon as it became clear that the pace of monetary policy tightening would soon slow. This resulted in the development of the current upward wave structure. Yesterday's inflation report further reduced the market's expectations for further tightening the Fed's monetary policy. The market response was anticipated; the inflation report, however, surprised me because I had anticipated a smaller decline. The decisions made by the FOMC will be made public tonight, but Jerome Powell's statement will be more significant. The market has already accepted that the rate will increase by 50 basis points, which obviously hinders the dollar's growth. Jerome Powell may be able to assist.
Conclusions in general
The upward trend section's construction has grown more intricate and is almost finished. As a result, I suggest making sales with targets close to the estimated 0.9994 level, or 323.6% Fibonacci. You should wait for a strong sales signal because the upward section of trend could become even more extended and complicated. The likelihood of this happening is still high.
The wave marking of the descending trend segment becomes more intricate and lengthens at the higher wave scale. The a-b-c-d-e structure is most likely represented by the five upward waves we observed. After the construction of this section is finished, work on a downward trend section may resume.
