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 completed. Only now the supposed wave c has assumed a five-wave form. The fact that the instrument continues to move mainly through corrective wave sets continues to make it very difficult to work with it.
It is very difficult to react to very frequent instrument reversals and very short waves. Thus, the current wave counting more or less accurately answers the question of what can be expected from the Euro/Dollar instrument now. I expect that from the current positions the instrument will continue to build a new upward trend section, quite possibly, again a corrective one. The wave counting may become more complicated one more time or several times, but its current version makes this option the main 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 Thursday. But at the same time, the markets had very important information over the past day that could help them draw certain conclusions. Right now, the US dollar does not have support from the Fed and Jerome Powell. During his speech in the congress, Fed Chair Powell said that the regulator is not going to cancel the QE program in the near future, as the markets expected. Despite the fact that inflation in the United States continues to accelerate, Powell continues to believe that it will take a long time before the economy fully recovers. Therefore, the Fed will not look at the inflation rate in the coming months. At the same time, the Fed expects inflation to start slowing down in a few months.
Another question is, at what values will it be in a few months, if it is already 5.4% YoY, which is a record for the last 13 years? One way or another, Powell made it clear that the Fed's priority is the full recovery of the labor market. And until the US economy gets close to maximum employment, the Fed will continue to stimulate it. These statements could well have caused a new wave of sales in the US dollar, which dropped yesterday before Powell's speech. Today the markets were trading very calmly, as if ignoring yesterday's performance. Nevertheless, hopes that the Fed would announce its readiness to start curtailing the stimulus program did not come true. Thus, the dollar did not receive the expected support.
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 signal "up". 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 not entirely unambiguous, however, at this time it is presumably completed or is nearing its completion and has assumed a three-wave structure. Thus, now I expect the construction of a new minimum three-wave upward trend section.
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