The wave pattern on the 4-hour chart for the euro/dollar pair continues to be non-standard but reasonably understandable. The quotes retreat from the previously reached highs, so the three-wave upward trend structure can be considered complete. The entire ascending trend segment, which started on March 15, may have a more complex structure, but at the moment, I expect the formation of a downward trend segment, which is likely to also consist of three waves. Recently, I have consistently mentioned that I expect the pair to be near the 1.0650–1.0760 level, where the upward three-wave pattern began.
The high point of the last trend segment was only a few dozen points above the peak of the previous uptrend segment. Since December of last year, the pair's movement can be considered horizontal, and this type of movement will continue. The presumed wave b, which could have started forming on May 31, looks unconvincing. If the decline in quotes continues, it will be invalidated and will start forming again later.
The market is calm.
The euro/dollar exchange rate rose by 25 basis points on Wednesday, with a movement range of 27 points. Since the beginning of the week, the market has not pleased us with its activity. The pair alternates between upward and downward movements, covering very short distances within a day. On the 4-hour chart, it appears the market has frozen and is standing still.
The news background this week could be more encouraging. Today, the US released a report on the trade balance for April, as well as the volumes of imports and exports for the same month. In Germany, the industrial production data for April was released, and the volumes were again below expectations. However, none of these reports impacted market sentiment or the pair's movement. They are too insignificant. As of Wednesday evening, the only hope lies in the final assessment of the EU GDP report for the first quarter, which will be released tomorrow at noon. The market expects the European economy to grow by 0-0.1%, but the actual value of the report may slightly differ. Depending on the direction of the deviation, the pair will move throughout the day. However, this report does not fall into the category of important ones. Therefore, it is likely that the euro movement will be similar to that of Monday, Tuesday, and Wednesday.
Based on everything mentioned above, there will be no changes or additions to the wave pattern this week. The presumed wave b may maintain its prospects, but we will see its formation next week during the Federal Reserve meeting and the release of the US inflation report.
Based on the analysis, the upward trend segment formation is complete. Therefore, I currently recommend selling, as the pair has significant potential for a decline. I still consider the targets around 1.0500-1.0600 quite realistic, and I advise selling the pair with these targets in mind. From the level of 1.0678, the formation of a corrective wave may begin (or may have already begun), so consider new sales after a successful attempt to break this level or after an obvious completion of wave b.
On the larger wave scale, the wave pattern of the ascending trend segment has taken on an extensive form, but it is likely to complete. We have seen five upward waves, likely to form the structure of a-b-c-d-e. The pair then formed two three-wave patterns, downward and upward. It is likely in the process of forming another descending three-wave structure.