The wave analysis of the 4-hour chart for the euro/dollar pair remains quite clear. The entire upward segment of the trend, which began its construction last year, adopted a complex structure, and for the last six months, we have seen only three-wave structures alternating with each other. I've repeatedly mentioned that I expect the pair around the 5-figure level, where the last upward three-wave structure began. I stand by my words. The latest upward three-wave structure is complete, and the market is now constructing a downward trend segment.
Theoretically, the trend segment that started on May 31 can take on a five-wave form with an a-b-c-d-e structure, but it's hard to say that with certainty now. The news background needs to be stronger for the euro (and sometimes is frankly weak), which means demand for it does not remain consistently high. The economic statistics from the European Union still need improvement. A failed attempt to break through the 1.1032 mark, corresponding to 38.2% Fibonacci, would suggest the market is ready to sell again.
Nonfarm Payrolls did not meet expectations.
On Friday, the euro/dollar rate increased by 60 basis points. This isn't much, and this rise doesn't conclusively indicate the end of the first wave of the new downward trend segment (presumably). Wave 1 or a can be more prolonged than it is now, and even if it's complete, I expect the construction of an upward correction wave, after which a decline will resume.
On Friday, the market paid attention to just one report. The Nonfarm Payrolls for July was 187,000, compared to the market expectation of 200,000, prompting a massive flight from the US currency. However, this trend will not last long, and Friday's increase will become the starting point for growth above the 13-figure level. The market disregarded the unemployment rate, which decreased to 3.5%, and wage levels, which rose by 4.4%. Therefore, the economic statistics from the US were pretty decent. We're also receiving some positive news from the European Union currently.
Given this, the market has no basis for constructing a new strong upward wave. If this is true, the quote decline may resume early next week. The market has had time to analyze the results of the ECB and Fed meetings, so it will now closely monitor inflation reports and statements from members of these central banks. The ECB's Board of Directors will have to work hard for the market to believe in maintaining a "hawkish" approach to the rate. A strong increase in demand for the euro is only possible if the ECB signals readiness to raise the rate to 5% and above.
General Conclusions.
Based on the analysis, the construction of the upward wave set is complete. Targets in the range of 1.0500-1.0600 are quite realistic, and with these targets in mind, I recommend selling the instrument. The a-b-c structure looks complete and convincing, and the closing below the 1.1172 mark indirectly confirms the construction of a downward trend segment. Therefore, I continue to advise selling the instrument with targets around the 1.0836 mark and below. The construction of the downward trend segment will continue.
On a larger wave scale, the wave markup of the upward trend segment appears to be extended but is likely completed. We observed five upward waves, which most likely form an a-b-c-d-e structure. Subsequently, the pair constructed four three-wave structures: two downward and two upward. It is probably transitioning into the construction phase of another downward three-wave structure.
