The wave counting of the 4-hour chart for the Euro/Dollar instrument remains quite ambiguous and frankly complex. On a higher scale, the wave pattern is more understandable and clear. At this time, wave c is presumably continuing 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 internal waves do not exceed 100-120 points, and the ascending and descending waves constantly alternate. Any wave in the current wave structure can take on a more complex form at almost any time, so the wave count does not answer the question of how long the decline in the quotes of the instrument will continue.
In the current situation, I recommend paying closer attention to the Fibonacci levels, as well as looking for one hundred percent confirmation that the current wave/trend section is completed. 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 wasn't quite strong on Thursday. The European Central Bank summed up the results of its meeting and announced them to the markets. However, there were no special changes in the ECB's monetary policy. In general, the ECB has not made any particularly important decisions. The management of the central bank in the final statement again announced that the rates will not be changed in the near future, as there will be no changes under the PEPP program. The main goal remains to achieve a stable 2% inflation. Until this level is reached over a long period of time, no changes will be made to monetary policy. Thus, in the coming months and possibly until the end of 2021, we should not expect loud statements and actions from the ECB.
Earlier, the ECB has repeatedly made it clear that the EU economy is not yet ready to cancel the stimulus measures. The regulator is still waiting for an increase in inflation, but at the same time notes that it is mainly due to temporary factors that will end their influence by the end of 2021. Thus, even in 2022, inflation may continue to be below the target of 2%. Christine Lagarde said after the ECB meeting that the EU economy continues to recover, but it is too early to talk about raising rates or ending the PEPP program. It will continue to operate until the end of March 2022, and then, perhaps, it will be extended. Therefore, I do not see any changes in the ECB's rhetoric. The markets did not wait for any important information, although their activity increased slightly.
Based on the analysis, I conclude that the construction of the descending wave c can be completed in the near future. However, wave c is constantly becoming more complicated, so I recommend waiting for a decline to the 100.0% Fibonacci level. An unsuccessful attempt to break through the 1,1704 mark may indicate the completion of the entire downward trend section. Also, a successful attempt to close above the 76.4% Fibonacci level, which corresponds to 1.1836, can indirectly indicate the readiness of the markets to buy the instrument.
The wave counting of the new downward trend segment is not quite unambiguous, but at this time, it is presumably completed or is nearing its completion and has adopted a three-wave structure. Thus, I now expect the construction of a new minimum three-wave upward trend section.
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