The wave marking of the 4-hour chart for the euro/dollar instrument has undergone certain changes and now it no longer looks as unambiguous as before. Last week, there was a decline in quotes, which may be a wave E, or it may be a wave b-D. I believe that wave D is over, as the news background openly supports the rise of the US currency. Moreover, there are no clear internal waves inside wave C. Thus, they may not be inside wave D either. Based on this, I think that the probability that the instrument has moved to the construction of wave E is 80 percent. I give 20% of the probability that wave D will take a more complex form, a three-wave one. There is also a backup option with the completion of the construction of a downward trend section. In this case, on January 28, the construction of a new upward trend section began. But the same news background now does not give any reason to expect that an upward section of the trend will be built. A successful attempt to break through the 1.1314 mark, which corresponds to 100.0% Fibonacci, will indicate the readiness of the market for new sales of the European.
The ECB president did not expect such a rapid increase in inflation.
The euro/dollar instrument rose by 25 basis points on Tuesday and generally moved very weakly. At the same time, the market now resembles a compressed spring that can "shoot" at any moment. There is too much news right now that can cause a serious change in market sentiment. I have already said (and not only me) that the topic of the Ukrainian-Russian conflict is now being discussed on the pages of absolutely all major world tabloids. There is even a specific date of the Russian invasion of Ukraine - February 16. It is difficult to say how true this information is: I have never seen the war begin on schedule, and the date of its beginning was published in the media. Nevertheless, I admit that there may be several people around the world who have reliable information, and they are unlikely to share their opinions. Thus, for the time being, I urge everyone not to escalate panic and react to events, and not to information garbage.
At the same time, ECB President Christine Lagarde spoke at a meeting of the European Parliament and said that she was very surprised by the increase in inflation in recent months and especially in January. She confirmed that the medium-term target remains the same - 2% and said that the ECB will continue to closely monitor incoming statistical and economic data and study them to present a medium-term forecast for inflation. Lagarde also clearly stated that the rate increase will not happen until the asset purchase program is completed. Let me remind you that the ECB intends to abandon the stimulus no earlier than the second half of 2022. This means that the rate will not increase all this time.
General conclusions.
Based on the analysis, I conclude that the construction of the descending wave C is completed. However, wave D can already be completed too. If so, now is a good time to sell the European currency with targets located around the 1.1153 mark, which corresponds to 127.2% Fibonacci, for each MACD signal "down". Another upward wave may be built inside wave D, but for now, this option is a backup. A successful breakout attempt of 1.1314 will indicate that the market is ready for new sales of the instrument.
On a larger scale, it can be seen that the construction of the proposed wave D has now begun. This wave can be shortened or three-wave. Considering that all the previous waves were not too large and approximately the same in size, the same can be expected from the current wave. There is reason to assume that wave D has already been completed. Then the construction of wave E began.