The wave layout for the euro/dollar pair on the 4-hour chart looks quite convincing. Yet, the ascending section of the trend is getting more complex. It is rather prolonged and looks like a correction pattern. So, we have a complex corrective wave pattern consisting of a-b-c-d-e parts where the wave e has a more complex structure than the previous four waves. If the current wave setup is correct, then this structure may be nearing its completion or has already been completed as the peak of the wave e is much higher than the peak of the wave c. In this case, we can expect the formation of at least three descending waves. If the last section of the trend represents a correction, then the following section may represent a momentum movement. Therefore, I anticipate a strong decline in the pair. A failed attempt to break through the 1.0726 level, which corresponds to the 200.0% Fibonacci level, indicates that the market is ready to turn bearish on the pair. However, demand for the US dollar hasn't increased yet despite all the favorable factors. The internal structure of the wave e looks very unclear as we can hardly identify any sub-waves within it.
EUR/USD trading flat despite clear sell signals
On Monday, EUR/USD advanced by 15 pips and added another 40 pips on Tuesday. However, these results shall not confuse you as they are rather notional. In other words, the pair never closes a day at the same price level even during a flat movement. This means that in any case there will be some changes in the price. The fact is that the instrument has been trading flat recently, and neither the dollar nor the euro is getting an advantage. If we take a look at the news background in the first two days of the week, it becomes clear why trading has been so sluggish. On the contrary, last week was full of important events that were supposed to set the market in motion. Yet, given that the euro has been largely overbought recently, the market did want to push it higher. As for the US dollar, there was simply no demand for it. The situation is really weird now. There is no fundamental background and the market stays still. What is more, ahead is the holiday season which means that the situation won't change drastically. Besides, the market has fully priced in the results of the recent central banks' meetings as well as inflation reports. Therefore, these factors have no more driving force to help the pair leave the sideways channel.
Conclusion
Based on the analysis above, I can conclude that the ascending section of the trend has become more complex and took on a five-wave structure that is nearing its completion. With this in mind, I would recommend selling the pair with the targets located at 0.9994, which corresponds to the 323.6% Fibonacci level. It is also possible that the ascending section of the trend will get a more extended form. This scenario is very likely. At least, we have a relevant sell signal.
On higher time frames, the wave layout of the downtrend is getting extended and more complex. We have identified five ascending waves that most likely make up the a-b-c-d-e structure. The pair may start a downtrend as soon as this trend section is completed.