The wave pattern of the EUR/USD pair indicates the ongoing formation of an ascending section of the trend. However, we can assume that the uptrend has been already completed. Thus, I think that a new descending section is being formed at the moment which may turn out to be a corrective three-wave pattern. At the same time, a successful attempt to break through the high of the expected wave 5 in 5 will indicate the start of a bullish trend in the market. As a result, the uptrend section may become more complex.
The wave pattern on a smaller time frame also signals a possible completion of the uptrend. The internal wave layout of the supposed wave 5 looks quite convincing. So now, at least a three-wave descending pattern can be built. If this is true, then the quotes will continue to decline in the long term to the targets located near the 19th area and below. Three unsuccessful attempts to break through the 127.2% level suggest that the pair is set to start a downward movement soon.
The week ahead of New Year's Eve started with active trading. Since the morning session, the euro/dollar pair has moved up by 60 pips, but then retreated by the same amount. So, the instrument was trading quite actively on Monday. However, the wave pattern that has been formed after December 18, creates a mixed picture. In the following week, the pair has neither resumed the construction of the uptrend nor has it begun the formation of a new downtrend. Over the past week, markets are uncertain about how to trade the instrument. That is why it has been trading sideways. The news background is very weak right now, as the Christmas week and the upcoming New Year holidays are doing their bit. This week, market participants do not expect any macroeconomic reports. At the same time, quite important news is coming from the US where the country was once again on the edge of a shutdown. Finally, Donald Trump has singed the spending bill for 2021 which also includes a long-awaited $900 billion coronavirus relief package. This fiscal stimulus is aimed at supporting the county's economy and its citizens. Notably, Democrats and Republicans have not been able to agree on the bill since early August this year. At first, Trump refused to approve this budget plan and demanded a number of amendments. But later he gave in, as several members of the House of Representatives appealed to the president with a request to either sign the law or veto it. Donald Trump would have been fully responsible for the rejection of the bill which would have affected his already low political rating. So, the US leader decided to sign the bill. This means that all government services will avoid the shutdown and American citizens and businesses will finally receive financial aid from the government.
Conclusion and trading tips
The euro/dollar pair has supposedly completed the formation of an ascending trend section. Thus, I recommend selling the instrument with the targets located near the 20 and 19 areas following every new sell signal from the MACD indicator. At the same time, the wave layout of the uptrend section may become more complex and take on a more extended form. For this, the pair needs to break through the 1.2270 mark, which is only 80 pips away from the current price level.