The wave marking of the 4-hour chart for the euro/dollar instrument at the moment still does not require adjustments, although wave 4 turned out to be longer than I expected. The whole wave structure can become more complicated once again, but any structure can always take a more complex and extended form. The construction of an ascending wave has been completed, which is interpreted as wave 4 of the downward trend section. If this is the case, the instrument continues to build a descending wave 5. The assumed wave 4 has taken a five-wave but corrective form. However, it can still be considered wave 4. There are no grounds to assume the completion of the downward trend segment yet. A successful attempt to break through the 0.9989 mark, which corresponds to 323.6% Fibonacci, indicates the market's readiness to continue reducing demand for the euro. I expect the decline in the quotes of the instrument will resume with targets located below the 1.0000 mark within wave 5. Wave 5 can take on almost any length since wave 4 turned out to be much longer than wave 2 – the waves acquire a more extended appearance as the downward trend section is built.
Monday turned out to be boring
The euro/dollar instrument declined by 50 basis points overnight on Monday, but a strong increase of 110 followed. Thus, the instrument even exceeded the opening levels of Friday, when Powell's performance had not yet begun. Let me remind you that the Fed president's speech on Friday evening caused the strong growth of the US currency, but on Monday, the demand for the US dollar began to decline again. What could it be? Does the market need a longer pause before a new jump down, or will wave 5 be completed at this point? Technically, wave 5 may already be completed since its low is below the previous wave 3. Nevertheless, I do not see any serious changes in the news background in recent weeks to make such a conclusion. Wave 5 went only a few dozen points beyond the low of wave 3, and it seems to me that this is not enough.
At least two important events this week will help the market decide on further actions. A report on inflation in the European Union for August will be released on Wednesday, and a Nonfarm Payrolls report in the United States will be released on Friday. Both reports can greatly affect the market's mood, but at the same time, it is impossible to say now what values we will see. Therefore, any movements after these reports can be assumed. If the labor market starts to shrink, it will be a harbinger of trouble as Jerome Powell, in his last speeches (and on Friday, too), stressed the fact that the recession of the American economy is not yet threatened just because of the strong labor market. According to Powell, a decline in GDP cannot be considered a recession if an increase in unemployment does not accompany it. And unemployment in the United States remains at its lowest level in half a century. But if the labor market disappoints, then Powell will have "nothing to cover," and demand for the US currency may begin to decline.
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 near the estimated 0.9397 mark, which equates to 423.6% Fibonacci for each MACD signal "down" in the construction of wave 5. So far, I don't see a single signal indicating this wave's end.
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.