The wave pattern on the 4-hour chart for EUR/USD remains unchanged. We are currently observing the construction of the presumed wave 3 in 3 or C of a downward trend segment. If this is the case, the decline in quotes will continue for a considerable time, as the first wave of this segment completed its formation around the 1.0450 mark. Consequently, the third wave of this trend segment should end lower.
The 1.0450 mark is the target only for the third wave. If the current downward trend segment becomes impulsive, we will see five waves in total, and the euro could fall below 1.0000. Of course, it isn't easy to expect such a development now, but the forex market has seen plenty of surprises in recent years. Anything is possible.
Can the wave pattern change? It is always possible. In recent weeks, the instrument has only been rising, but two unsuccessful attempts to break through the 1.0880 mark, equivalent to 61.8% on the Fibonacci scale, could be the starting point for the construction of wave 3 in 3 or C, which my readers have been eagerly anticipating.
The 1.0880 mark saved the dollar, but the 1.0788 mark halted its movement.
The EUR/USD instrument rose by 30 basis points on Thursday. The increased demand for the euro today was due to two factors. First, sellers encountered the 1.0788 mark, corresponding to 76.4% on the Fibonacci scale. Second, the European Union unexpectedly released a positive unemployment report for April. The market expected the unemployment rate to remain at 6.5%, but it actually decreased to 6.4%. Although this report does not hold the same status as inflation or GDP, a reduction in unemployment is still a positive factor for the European economy. This positivity accounts for the 30-point rise in the euro's price today.
Currently, we have two unsuccessful attempts to break through the 1.0880 mark and one at the 1.0788 mark. Since the last rebound was related to the 1.0788 mark, the instrument might return to 1.0880. Around this mark, the fate of the US dollar will be decided for the third time. If buyers manage to break it on the third attempt, the instrument's rise will continue, and the entire wave pattern will need significant adjustments. If, after a small pullback from the reached lows, the decline resumes (which is more likely), then the anticipated wave 3 in 3 or C will continue its formation. I expect the second scenario to unfold.
General Conclusions
Based on the analysis of EUR/USD, the formation of the downward wave set continues. In the near future, I expect the construction of the impulsive downward wave 3 in 3 or C to resume, significantly reducing the instrument. I continue to consider only sales with targets around the estimated mark of 1.0462. Two unsuccessful attempts to break through the 1.0880 mark, equivalent to 61.8% on the Fibonacci scale, indicate the market's readiness for new sales.
On the higher wave scale, the presumed wave 2 or B, which amounted to more than 61.8% on the Fibonacci scale of the first wave in length, might be complete. If this is the case, the scenario with the construction of wave 3 or C and the instrument's decline below the fourth figure has begun to materialize.
Key Principles of My Analysis:
Wave structures should be simple and clear. Complex structures are hard to trade and often change.If uncertain about the market situation, it is better to avoid entering.There can never be 100% certainty in the market's direction. Always use protective Stop Loss orders.Wave analysis can be combined with other types of analysis and trading strategies.