The wave counting on the 4-hour chart for the Euro/Dollar instrument remains rather ambiguous. A new departure of quotes from the lows reached again allows us to assume that the downward wave c, and with it, the entire downward trend is over. Only now the supposed wave c has taken a five-wave form, as I assumed yesterday. Thus, the fact that the instrument continues to move mainly with the help of corrective wave sets continues to make it very difficult to work with it. It is very difficult even to react to very frequent instrument reversals and very short waves. Thus, the current wave counting now more or less accurately answers the question of what can be expected from the Euro/Dollar instrument now. However, this does not make it easier to work with the pair. Within wave c, five waves are visible, so if everything is according to the classics, then from the current positions the construction of a new upward trend section will begin, possibly again a three-wave corrective one. A successful attempt to break through the low of wave e in c will indicate an even greater complication of wave c.
The news background for the Euro/Dollar instrument was extremely weak on Wednesday. Yesterday, the instrument made an impressive decline after the release of the American inflation, but today the quotes began to rise, which indicates that the markets are not ready for more serious purchases of the dollar. In addition, wave counting predicts the construction of a new upward set of waves. This morning, the report on industrial production in Europe for May was released and the figures again did not please the markets. Production fell 1% MoM and rose 20.5% YoY. However, the markets were waiting for more optimistic data.
Nevertheless, this report did not prevent the euro from gaining 55 basis points during the day. This evening, an event will take place that may have a resonant significance for the foreign exchange market and for the dollar. Fed Chair Jerome Powell will address the US Congress before the Financial Services Committee. Given yesterday's inflation figures, markets and Congress will be waiting for the Fed chairman to comment on this. Of course, it is not a fact that Powell will provide new information. Or that he will not say something like "inflation is under control, and the Fed is ready to intervene at any moment using all the tools available to it." In general, the markets are waiting for new comments on the growing inflation, and if they wait for it, the pair can spend the rest of the day very actively.
Based on the analysis, I conclude that the construction of the downward wave can be completed. Thus, at this time, I recommend buying the instrument with targets located around 1.1917 and 1.1985, which corresponds to 61.8% and 50.0% Fibonacci, for each MACD upward signal. This option will be canceled if the instrument makes a successful attempt to break the current low of wave c.
The wave counting of the new downward trend section is not entirely unambiguous, but at this time it is presumably completed or nearing its completion and has assumed a three-wave structure. Thus, I now expect a new low of the three-wave upward trend to be built.
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