The wave marking of the 4-hour chart for the euro/dollar instrument still does not require adjustments, despite the increase in quotes within the framework of the expected wave 4 turned out to be stronger than I expected. The new wave marking does not yet consider the rising wave marked with a bold red line. The whole wave structure can become more complicated again, which is the disadvantage of wave analysis since any structure can always take a more complex and extended form. The construction of an ascending wave, which is interpreted as wave 4 of the downward trend section, is presumably completed. If this assumption is correct, the instrument has started building wave 5. The assumed wave 4 took a five-wave but corrective form. However, it can still be considered wave 4. An unsuccessful attempt to break through the 1.0356 mark, which equates to 261.8% by Fibonacci, indicates that the market is not ready to continue buying the EU currency. Therefore, I expect the decline in the quotes of the instrument will continue with targets located below the 1.0000 mark within wave 5.
The EU's GDP did not interest the markets, but maybe the Fed's protocol will be of interest?
The euro/dollar instrument fell by only 10 basis points on Wednesday. The wave marking did not suffer any changes today, as there were no movements: the amplitude was very low. The market began to show from the very morning that it was not interested in the value of the GDP report for the second quarter in the Eurozone. This indicator is one of the most significant since it reflects the state of the economy for three months. Nevertheless, the value of +0.6% q/q did not convince the market that the European economy is in good condition. Recently, a huge amount of talk has been born in the market around such a thing as a recession. Analysts are trying to connect this concept with the European economy – both with the American and British. And in each case, the basis for such conclusions is different. In Europe, everyone expects a recession due to a possible energy crisis and a banal shortage of fuel in the winter period of the year. In the UK, they rely on Andrew Bailey's statements, which warned that a recession is inevitable and will be very serious. And in the US, there is no need to assume anything since GDP has been indicating a decline in the economy for two consecutive quarters.
The Fed minutes will be published tonight. The minutes of the meeting at which the interest rate was raised again by 75 basis points, but the market perceived it as "dovish." Demand for the US currency declined immediately after the meeting. Now we have to find out the whole background of this meeting. In particular, how many members of the PEPP committee support further aggressive rate increases, and what parameters will the regulator focus on when making future decisions? From my point of view, there is no intrigue here because it is obvious that the Fed will rely on the inflation indicator. Jerome Powell has already stated that inflation is the main goal of the Fed, and the regulator decided to neglect the economy and does not believe that a recession has begun.
General conclusions
Based on the analysis, I conclude that the construction of the downward trend section continues. I advise you to sell the instrument with targets located near the calculated mark of 0.9397, which is equal to 423.6% Fibonacci, for each MACD signal "down," counting on the construction of wave 5. A successful attempt to break through the level of 261.8% Fibonacci may lead to the cancellation of the working option with the instrument sales.
At the higher wave scale, the wave marking of the descending trend segment becomes noticeably more complicated and lengthens. It can take on almost any length, so I think it's best to isolate three and five-wave standard structures from the overall picture and work on them.