The wave analysis of the 4-hour chart for the EUR/USD pair remains unchanged. Over the past year, we have seen only three large-scale wave structures that constantly alternate with each other. At the moment, the construction of another three-wave structure continues - a downward one, which began on July 18 of last year. The presumed wave 1 is completed, and wave 2 or b has become more complex three or four times, but it is also currently completed.
The upward trend segment may still resume, but in this case, its internal structure will be absolutely unreadable. I remind you that I highlight unambiguous wave structures that do not tolerate ambiguous interpretations. If the current wave analysis is correct, then the market has moved on to forming wave 3 or c since December 28. At the moment, wave 2 in 3 or c is presumably completed. If this is indeed the case, the decline in quotes will continue. An unsuccessful attempt to break through the level of 1.0956, which is equivalent to 50.0% according to Fibonacci, also indicates the completion of the corrective wave.
The euro maintains bearish sentiment.
The EUR/USD pair rose by 15 basis points on Tuesday. The range of movements has become even lower compared to Monday and last week. However, last week, the news background was strong, while in the first two days of this week, the market received only insignificant news. For example, speeches by several ECB and Fed members took place, the comments of which were not noted by market participants. Among them were really interesting statements, but they did not interest traders. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, said he expects three rounds of rate cuts in 2024, while his colleague Raphael Bostic said he expects only one round of monetary policy easing. I'll put it this way: such information could have influenced market sentiment, but it did not.
Also, on Monday, Christine Lagarde spoke, and on Tuesday, Philip Lane. However, the two main faces of the ECB also did not make important statements. Both policymakers said that inflation would continue to decline, but in the matter of policy easing, it is necessary to be cautious about starting too early or too late. Overall, market expectations after the whole series of speeches have not changed. The ECB still expects a rate cut in June, and the Fed also expects it in June, but there are certain doubts related to the fact that American inflation may continue to show stability.
Based on all of the above, demand for the US dollar will continue to increase slowly. There is no hurry for the market, and the recent global waves have been leisurely.
General conclusions.
Based on the analysis of EUR/USD, the construction of a bearish wave set continues. Wave 2 or b has taken on a completed form, so in the near future, I expect the continuation of the construction of an impulsive downward wave 3 or c with a significant decrease in the pair. I continue to consider sales with targets located around the calculated mark of 1.0462, which corresponds to 127.2%, according to Fibonacci.
On a larger wave scale, it can sumed wave 2 or b, which in length exceeded 61.8% according to Fibonacci from the first wave, may, therepleted. If this is indeed the case, then the scenario with the construction of wave 3 or c and the decline of the pair below the 4-figure mark has begun to be implemented.
The main principles of my analysis:
- Wave structures should be simple and understandable. Complex structures are difficult to play with; they often bring changes.
- If there is confidence in what is happening in the market, it is better to avoid entering it.
- There is no one hundred percent certainty in the direction of movement, and there can never be. Remember about Stop Loss protective orders.
- Wave analysis can be combined with other types of analysis and trading strategies.
