The wave counting of the 4-hour chart for the Euro/Dollar instrument became more complicated at the end of last week, and this week it has not undergone any changes. This is mainly because the amplitude of the instrument's movements for each individual day does not exceed 20 basis points this week. The quotes of the instrument fell below the low of the previous wave, so now we can definitely conclude that the wave counting has been transformed into a five-wave a-b-c-d-e. If this is true, then the last wave e is either nearing its completion, or has already been completed, since the attempt to break through the 1.1704 mark, which corresponds to 100.0% Fibonacci was unsuccessful. I would also like to draw your attention to the fact that in 2021, the Euro/Dollar instrument builds only corrective sections of the trend and only within the area of 1.1700 – 1.2350. And now it is just near the lower limit of this range. Thus, I expect the beginning of a new upward trend segment in the coming days with the prospect of growth by 500-600 points.
The news background for the Euro/Dollar instrument remained extremely weak on Thursday. However, yesterday there was a report on inflation, which caused a slight decrease in demand for the US currency, which led to an increase in the instrument by 40 basis points. However, these 40 points practically do not make any weather for the current wave counting. Now a lot really depends on the level of 1.1704. Without its successful breakdown attempt, there will be no further decline in quotes. Today, the European Union released a report on the volume of industrial production in June. This indicator was worse than the expectations of the markets and amounted to -0.3% MoM and 9.7% YoY. However, the European currency has not experienced any problems in this regard. The markets continue to ignore all the less important reports and respond only with a weak reaction to important publications.
In the same way, the markets ignored today's report on claims for unemployment benefits in the United States, which almost completely coincided with expectations. However, the weakness of the reports does not mean that the instrument should not move from its place the rest of the time. Now the markets are clearly not at ease and are waiting for some powerful event that will help them form a trading strategy for the coming weeks. So far, I am inclined to the option of building a new upward trend section, since two factors speak in favor of it at once: the apparent completeness of the downward trend section and an unsuccessful attempt to break through the 100.0% Fibonacci level. The news background does not allow us to expect a complication of this section of the trend.
Based on the analysis, I conclude that the construction of the downward trend section continues, but it may end around the level of 1.1704, which is equal to 100.0% Fibonacci level. A successful attempt to break through this level will indicate the readiness of the markets for further sales of the instrument. In this case, the wave e may take a more complex and extended form, and it will be possible to sell the instrument with targets located near the 1.1551 mark, which corresponds to 127.2% Fibonacci.
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. However, the last section of the trend quite unexpectedly began to take a more complex form, but it may still end in the near future.
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