The wave counting on the 4-hour chart for the Euro/Dollar instrument remains rather ambiguous and complicated. On a higher scale, the wave pattern is more understandable and clear. At this time, presumably, wave c continues its construction. The decline in quotes continues, albeit at a very weak pace. Nevertheless, it is still very difficult to trade at this time, since most of the waves do not exceed 100-120 points in size, and upward and downward waves are constantly alternating. Any wave in the current wave structure can take on a more complex form almost at any moment, therefore, wave counting does not answer the question of how long the instrument quotes will continue to decline. In the current situation, I recommend paying closer attention to Fibonacci levels, as well as looking for one hundred percent confirmation that the current wave/trend segment is complete. The current size of wave c is only slightly smaller than wave a. Thus, we can expect a decline in quotes with targets located near the Fibonacci levels of 100.0% and 127.2%.
The news background for the Euro/Dollar instrument on Wednesday was no different from what the markets had on Monday and Tuesday. No news or economic reports. Markets have already fully focused their attention on the upcoming ECB meeting and Christine Lagarde's speech and have shown that they are not going to increase their activity before these events. Thus, now we just have to wait for tomorrow and the results of the meeting of the central bank of the European Union. What will be their decisions? Most experts are unanimous in their opinion: none. The ECB can only announce an increase or decrease in the pace of the PEPP program. Or Christine Lagarde can point out the changed state of the European economy. There is also an opinion that the entire meeting will revolve around the inflation rate in the European Union. Not so long ago, Christine Lagarde announced that the ECB is changing its approach to calculating the target level for inflation, so at tomorrow's press conference, the markets will clearly be waiting for additional information on this issue.
Although, from my point of view, everything is very clear in this matter. The ECB is still aiming for inflation of 2%, which will persist over a long period of time. At the moment, it is 1.9%, so it does not yet meet the target value anyway. Inflation needs to continue to accelerate, and for this, the ECB needs to increase its economic stimulus programs. That is, allocate more money. This is the main issue of the ECB meeting. According to Christine Lagarde, the current surge in inflation may be temporary, and if she is right, then the ECB all the more need to stimulate the European economy more actively. For the markets, such rhetoric may be an additional reason to reduce the demand for the euro.
Based on the analysis, I conclude that the construction of the downward wave c can be completed in the near future. However, wave c is constantly getting more complicated, so I recommend waiting for the ECB meeting and a decline to the 100.0% Fibonacci level, after which the instrument's dynamics for the near future will become clear. An unsuccessful attempt to break the 1.1704 mark may indicate the completion of the entire downward trend.
The wave counting of the new downward trend section of the trend 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 the construction of a new low of the three-wave upward trend.
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