FX.co ★ Wave analysis of EUR/USD for August 2. Eurozone's manufacturing PMI remains high

The wave counting of the 4-hour chart for the Euro/Dollar instrument has acquired a more readable and complete form. The instrument has started to increase quotes and has been continuing it for several days with a minimum amplitude. This movement already looks like an independent wave, which may be the first part of a new upward trend section. Thus, at the moment, the expected wave c and the entire downward section of the trend are considered completed. If this assumption is correct, then the price increase will continue with the targets located near the 20th figure and the level of 1.2065, which corresponds to 50.0% and 38.2% Fibonacci.

The final targets of the entire upward trend segment are located near the highs of the previous upward trend segment. And this is only on the condition that the trend section will receive a corrective appearance. If it turns out to be impulsive, then the price increase should continue above the 1.2250 mark. I am not considering the option of complicating the downward trend section yet. Since I recommend using the signals "up" from the MACD, then at the time when it will be directed down, you will not have to trade the instrument.

The news background for the Euro/Dollar instrument was quite weak on Monday. During the day, the index of business activity in the manufacturing sector (PMI) was released in the European Union, which amounted to 62.8 points, while the market expected 62.6 points. The index of business activity in the US manufacturing sector and the ISM index will also be released later today. Perhaps the markets will try to work out these reports if they turn out to be unforeseen. However, to be honest, there are not very many chances for this. The markets continue to trade as cautiously as possible, as if not wanting to take risks. This is clearly seen from wave c, which stretched for almost a month, and the US currency at the same time added only 220 basis points. Thus, the news background now does not have the strongest influence on the instrument and the mood of the markets.

Last week, several important events and publications of important information took place at once. However, over the past week, the instrument has grown by 100 basis points, which is also not a strong amplitude of movement. Thus, I can assume that the markets are now trying to be as risk-free as possible, hence the rather long waves, as well as weak corrective waves. If the market turns around, then even in the correction, it looks in one direction for as long as possible.

Based on the analysis, I conclude that the construction of the downward wave c is completed. Thus, as I said earlier, it is now possible to buy the pair with targets located near the nearest Fibonacci levels. These levels are 1.1919 and 1.1983, which corresponds to 61.8% and 50.0% Fibonacci. I recommend making purchases for each new MACD signal "up". It should also be recognized that the downward section of the trend may still become more complicated and take a longer form. However, so far I do not consider this option even as a backup.

The wave counting of the higher scale looks quite convincing. We see three three-wave sections of the trend, which are approximately the same in size. This gives reason to assume that the last downward section of the trend is really completed. If this is true, then we can expect an increase in the quotes of the instrument in the coming weeks by 200-300 basis points.