The wave counting of the 4-hour chart for the Euro/Dollar instrument became more complicated at the end of last week. The news background which led to a fairly strong decline in the quotes of the instrument continues in the first days of the new week. The quotes of the instrument fell below the low of the previous wave, so now we can definitely conclude that the wave marking has been transformed into a five-wave type a-b-c-d-e. If this is indeed the case, then the last wave e is already nearing its completion. An unsuccessful attempt to break through the level of 1.1704, which corresponds to 100.0% by Fibonacci, will indicate that the markets are not ready for further sales of the European currency and are ready to build a new upward trend section. I would also like to draw your attention to the fact that in 2021, the Euro/Dollar instrument builds only corrective sections of the trend and only within the range of 1.1700 – 1.2350. And now it is just near the lower limit of this range. Thus, I expect the beginning of a new upward trend segment in the coming days with the prospect of growth by 500-600 points.
The news background for the Euro/Dollar instrument remained extremely weak on Wednesday. There was no important news either in the United States or in the European Union. However, even without looking at the calendar, you can come to the same conclusion very easily and quickly. After all, in the first two days of the week and half of the third, the amplitude of the instrument was the minimum values. The instrument has been declining all this time, but it did it so weakly that it is completely unclear on the basis of what did it. After all, the wave counting now suggests a decline, and the news background could only superficially support the demand for the US currency. Simply due to the fact that the US Senate approved a $1 trillion infrastructure investment bill. In just half an hour, the inflation report for July will also be released in America. And its value can be either with an increase relative to June, or with a decrease.
Even though inflation has only been growing in recent months, this does not mean that it will now grow constantly. Thus, a decline is possible for at least a couple of months. I want to say that today, with an equal degree of probability, the markets can see both a high and a low value. It is difficult to say what the reaction of the markets will be. It is possible that it will not be at all or it will be very weak. The main thing is that the markets may start trading more actively in the next hour. And the departure of quotes from the reached lows will assure that the construction of a downward trend section is completed.
Based on the analysis, I conclude that the construction of the downward trend section continues, but it may end around the level of 1.1704, which is equal to 100.0% Fibonacci. A successful attempt to break through this level will indicate the readiness of the markets for further sales of the instrument. In this case, the wave e may take a more complex and extended form, and it will be possible to sell the instrument with targets located near the 1.1551 mark, which corresponds to 127.2% Fibonacci.
The wave counting of the higher scale looks quite convincing. We see three three-wave sections of the trend, which are approximately the same in size. However, the last section of the trend quite unexpectedly began to take a more complex form, but it may still end in the near future.