The EUR/USD pair performed a reversal in favor of the US currency on Wednesday and even consolidated under the corrective level of 76.4%–1.0823. However, the holiday for the dollar did not last long. An hour later, a reversal was performed in favor of the European currency and a reverse closure above the Fibo level of 76.4%. Thus, at this time, the growth process can be resumed in the direction of the corrective level of 61.8%–1.0883. However, I believe that yesterday's growth of the pair is accidental and was caused by one weak report in the United States. The consolidation under the uptrend corridor indicates that the pair's fall is still more likely.
The situation with the waves remains quite clear. The last completed upward wave confidently broke through the peak of the previous wave (from February 12), but at the moment I consider it completed. Thus, at the moment, we have a "bullish" trend, and there is no sign of the completion of any wave. However, the fixation of quotes below the corridor can be considered the first sign of the bulls' retreat. In the near future, I expect the formation of a corrective downward wave that will not violate the "bullish" trend. But if the next upward wave fails to surpass the peak from February 22, we will get the first wave sign of a trend change to "bearish."
The information background on Wednesday was again very weak. A GDP report for the fourth quarter was released in the United States, which I do not consider important. Every quarter, we receive three GDP estimates; the second is not the most important. GDP growth rates decreased to 3.2%, only 0.1% below traders' expectations. Thus, the bears were slightly disappointed yesterday but should still be able to take the path they had just taken, exiting the ascending corridor.
On the 4-hour chart, the pair made a new rebound from the 50.0% correction level at 1.0862. Thus, a reversal in favor of the US currency was made, and a decline toward the corrective level at 38.2%-1.0765 began. Fixing the rate above the level of 1.0862 increases the probability of resuming growth towards the 61.8% correction level at 1.0959. No new impending divergences were observed by any indicator today.
Commitments of Traders (COT) report:
In the last reporting week, speculators opened 2346 long contracts and closed 12823 short contracts. The sentiment of the "Non-commercial" group remains "bullish" but continues to weaken. The total number of long contracts speculators hold is now 213 thousand, and short contracts - 145 thousand. The situation will continue to change in favor of the bears. Bulls have dominated the market too long and need strong information to maintain the "bullish" trend. At the same time, the total number of open Long positions is less than the number of Short positions (644K versus 665K). But such a balance of power has been observed for quite some time.
News calendar for the USA and the European Union:
European Union - Change in Retail Trade Volume in Germany (07:00 UTC).
European Union - Unemployment Level in Germany (07:00 UTC).
European Union - Consumer Price Index in Germany (13:00 UTC).
USA - Consumer Price Index (13:30 UTC).
USA - Personal Income and Spending (13:30 UTC).
USA - Initial Jobless Claims (13:30 UTC).
On February 29, the economic events calendar contains several entries, among which the inflation in Germany stands out. The impact of the information background on traders' sentiment today may be of moderate strength.
Forecast for EUR/USD and trader recommendations:
Sales of the pair were possible on the rebound from the level of 1.0862 on the 4-hour chart, with targets at 1.0823 and 1.0785. The first target was reached, and the second was almost reached. New sales - when closing below 1.0823 with targets at 1.0785 and 1.0725. I will not consider buying the pair for now, as the decline in euro quotes will continue for some time.