A few weeks ago, the wave markings on the 4-hour chart for the euro/dollar instrument got more complex and no longer had a holistic appearance. There was a successful attempt to break through the 261.8 percent Fibonacci level, which was also the low of the waves E and b; hence, these waves are no longer E and b. Thus, I have constructed a new wave markup that does not yet account for the ascending wave indicated by a bold red line. I've already stated that the entire wave structure can be complicated indefinitely. This is the drawback of wave analysis, as any structure is always capable of assuming a more complicated and extensive shape.
Consequently, I propose to now focus on simpler wave structures, including waves of a smaller scale. As shown, the creation of an upward wave, which may be wave 4 of a new downward trend section, is proceeding. If this estimate is accurate, the instrument might gain another 100-150 basis points before resuming its slide within wave 5 with objectives below 1.0000. Additionally, the development of the fifth wave may have already begun. So far, I see no reason to anticipate additional instrument moves.
The market had a mixed reaction to the ECB meeting.
Thursday saw a rise of 10 basis points in the euro/dollar exchange rate. The amplitude of the movements was extremely strong, and the difference between the present rate and the rate at the start of the day was 10 percentage points. The instrument rose by 100 basis points throughout the day before falling drastically. These big changes occurred in the hours following the summary of the ECB meeting - the most significant event of the week. The market did not anticipate the increase of 50 basis points in the interest rate, which I will state immediately. Some analysts expected a gain of precisely 50 points, but there are always some who disagree with the consensus, and their predictions are not always accurate. This time, they were realized. There are currently no remarks on monetary policy, and Christine Lagarde's address will begin shortly. It will be able to get a great deal of crucial information from it, but for the time being, we shall assess what we now have.
A rate increase of 50 basis points indicates that the ECB has begun to worry about more price hikes. The most recent inflation report shows an 8.6% increase compared to June of the previous year. This inflation rate is the highest in decades. Although ECB experts and economists anticipate a reduction in the impact of variables on price growth, they are still uncertain about this. Therefore, the regulator was forced to resort to more robust instruments. The primary question is whether the ECB will hike rates in the future. If this is the sole rise in 2022, it will serve little purpose. At least in terms of combating inflation. As we can see, demand for the euro has not increased due to this occurrence, and wave 5 of its decline can now commence.
General observations.
I infer based on my findings that construction of the downward trend segment continues. If this is the case, it is now viable to sell the instrument with goals at the estimated 0.9397 level, which corresponds to 423.6 percent Fibonacci, for each "down" MACD signal generated during the development of wave 5. Wave 4 is currently completeable.
At the larger wave size, the wave marking of the descending trend segment becomes considerably more complex and extends in length. It can assume virtually any length, so I believe it is best to focus on three and five-wave conventional wave shapes for the time being.