The wave layout for the EUR/USD pair still indicates the formation of an ascending trend section. However, we can assume that the formation of an uptrend has been already completed. I think that at the moment a new downward trend section is being formed, which may turn out to be a three-wave corrective pattern. At the same time, a successful attempt to break through the high of the expected wave 5 in 5 will indicate the bullish trend in the market. As a result, the ascending section may take on a more complex form.
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 rather clear. 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. However the pair is again testing this level from bottom to top, and this time it may succeed in breaking through it.
New Year is approaching, with a few days left ahead. Trading activity on Forex is low due to the festive mood, but traders still open new positions. The euro/dollar pair stays within the uptrend. Almost 30 pips separate the current price level from a yearly high. It seems that the price will finally break through the 127.2% level as market participants are reluctant to buy the US dollar. Therefore, a breakout of this mark will make the ascending trend pattern even more complex. Although different news is coming in recent days, markets seem to downplay this fact. Donald Trump continues to oppose Congress and the Senate in his final month in office. First, the President vetoed the defense spending bill and then refused to sign the coronavirus relief and government funding bill for 2021. The Senate somehow managed to persuade Trump to approve the stimulus package in order to avoid the shutdown. However, in the case with the defense bill, they chose a different strategy. They simply decided to override Trump's veto. This news may seem quite important, but not for the US dollar. Markets are unlikely to react to the disagreement between Trump and the US Congress, given that Joe Biden will take office on January 20. The process of transfer of power has been in full swing for more than a month. Thus, there are hardly any new reasons for the greenback to decline. Its current weakness can be attributed to Christmas and New Year holidays.
Conclusion and trading tips
The EUR/USD pair seems to have completed the formation of the uptrend. So, I recommend selling the instrument with the targets located near the 20 and 19th area upon every new sell signal from the MACD indicator. At the same time, the wave pattern of the uptrend section may become more complicated and take on a more extended form. For this, the pair needs to break through the 1.2270 mark, which is only 30 pips away from the current price level.