FX.co ★ Wave analysis of EUR/USD for July 6, 2021

The wave counting on the 4-hour chart of the Euro/Dollar instrument remains rather ambiguous. The instrument continues to move mainly with the help of corrective sets of waves, so the trend segments of about 500 basis points simply alternate. In the same way the corrective waves themselves alternate. I have already said that the internal wave counting of the last downward trend looks complicated. A decline in quotes in today's trading may be an internal wave of a future wave c, and most likely, this wave will resume its construction, although yesterday everything looked as if the instrument was ready to complete the construction of the downward trend section. However, now, after the loss of 60 basis points, the wave pattern looks somewhat different. But in this case, I recommend not jumping to conclusions. The news background is not the most unambiguous right now, and the American currency does not have strong support at the moment. Thus, tomorrow the instrument may start to rise again, which can again be considered as the completion of wave c.

The news background for the Euro/Dollar instrument was not the strongest on Tuesday, and, even though the trading was quite active during the day, I cannot say with confidence that it was the reports published that caused the euro to rise. Let's start with the fact that the number of industrial orders in Germany decreased by 3.7% MoM in May, although the markets expected to see +0.9% MoM. In theory, this report could trigger a sell-off in the euro. However, do you remember the last time the markets reacted to this report? Nevertheless, there were no reports at all at 10 UTC, and the German report came out an hour earlier.

Since it was at 10 UTC that the instrument turned downwards, I conclude that it happened for reasons not related to the news background, and the news background itself only supported the actions of the markets. For example, a little later after the reversal in Germany and the European Union, reports on business sentiment were released, which showed a sharp decline in this very business sentiment. Thus, the decline in the euro could have continued due to this information. On the other hand, retail sales, which came out in the Eurozone also around the same time, turned out to be better than market expectations, amounting to +4.6% MoM. Thus, I can't say for sure whether Tuesday's economic reports affected the instrument at all. Everything looks too ambiguous. The same applies now to the wave counting of the instrument.

Based on the analysis, before a successful attempt to break through the 76.4% Fibonacci level, I now expect a new upward set of waves to be built. Probably also three-wave. Thus, at this time, I recommend buying the instrument with targets located around 1.1985 and 1.2051, which corresponds to 50.0% and 38.2% Fibonacci, for each MACD signal "up".

The wave counting of the new upward trend section is not entirely unambiguous, however, at this time, it is presumably completed and has taken on a three-wave form. Thus, now I expect the formation of three downward waves, and all three waves may already be completed. At the same time, the trend section may take a five-wave form.