Analysis of EUR/USD on April 14. The euro currency is tired and needs a rest
April 14, 2023 3:23 pm
The wave markup of the 4-hour chart for the euro/dollar pair continues to get more complicated due to the recent ascending waves. These waves could be the beginning of a new upward trend section (since the last downward one can be considered three-wave and completed), but at the same time, this trend section may end soon if it also takes on a three-wave form. Thus, the wave pattern for the euro may become very complex, and working with it isn’t easy now. At current positions, the formation of an upward set of waves may end as the peak of the third wave goes beyond the peak of the first. We saw the same thing in the last downward formation. At the same time, there are other options for wave markup. For example, a full-fledged five-wave pattern. It is now advisable to base our expectations on the scenario of the pair’s rise because the assumed wave c (downward set of waves) turned out to be very weak. Therefore, buyers are stronger than sellers, and the ascending wave c may extend more. The nearest target to consider is the peak of wave e, which corresponds to 1.1033.
The economic statistics of the market could be more interesting.
The euro/dollar pair fell by 20 basis points on Friday. At the beginning of the day, demand for the European currency was increasing again, and only with the opening of the US markets did the decline begin. In the first half of the day, there was no news background, which means the market had no reason to increase demand for the euro. In the second half of the day, at least two interesting reports were released in the US, each of which did not support the dollar. And yet, the US currency ends the last day of the week in the green. I want to draw attention to the fact that the news background of recent weeks is sometimes unambiguous. How to relate to inflation if the main indicator decreases and the core one grows? Should we consider inflation to be falling or rising? Which of these indicators does the central bank focus more on? The market has confidently increased demand for the euro recently, but there has only sometimes been a news background for this. After all, the longer one of the currencies grows, the less effect new data supporting this currency brings.
Today, a retail sales report was released in the United States, which decreased by 1.0% in March m/m. Industrial production grew by 0.4%, with slightly lower market expectations. Demand for the US currency increased due to a decent production report, but what about retail sales? And such a picture has been observed for quite a long time. Reports are ambiguous or contradict each other, so it is difficult to clearly understand whether the market pays attention to the news background or whether it seems to us that it is playing out the news, but in fact, this is not the case.
General conclusions.
Based on the analysis, the formation of an upward trend section continues, taking on a three-wave form so far, and is expected to end soon. Therefore, now both sales and purchases can be equally advised. The news background does not answer which direction the pair will move. Wave analysis also needs to provide a clear answer. In the current situation, I would advise cautious purchases on MACD reversals “upwards.” A successful attempt to break through the 1.1033 mark downwards will indicate the possibility of opening sales.
On the senior wave scale, the wave markup of the ascending trend section has taken on an extended form but is likely completed. We saw five waves up, which are most likely the a-b-c-d-e pattern. The formation of the downward trend section may still need to be completed, and it can take any form in structure and duration.
The material has been provided by InstaForex Company – www.instaforex.com
The wave markup of the 4-hour chart for the euro/dollar pair continues to get more complicated due to the recent ascending waves. These waves could be the beginning of a new upward trend section (since the last downward one can be considered three-wave and completed), but at the same time, this trend section may end soon if it also takes on a three-wave form. Thus, the wave pattern for the euro may become very complex, and working with it isn’t easy now. At current positions, the formation of an upward set of waves may end as the peak of the third wave goes beyond the peak of the first. We saw the same thing in the last downward formation. At the same time, there are other options for wave markup. For example, a full-fledged five-wave pattern. It is now advisable to base our expectations on the scenario of the pair’s rise because the assumed wave c (downward set of waves) turned out to be very weak. Therefore, buyers are stronger than sellers, and the ascending wave c may extend more. The nearest target to consider is the peak of wave e, which corresponds to 1.1033.
The economic statistics of the market could be more interesting.
The euro/dollar pair fell by 20 basis points on Friday. At the beginning of the day, demand for the European currency was increasing again, and only with the opening of the US markets did the decline begin. In the first half of the day, there was no news background, which means the market had no reason to increase demand for the euro. In the second half of the day, at least two interesting reports were released in the US, each of which did not support the dollar. And yet, the US currency ends the last day of the week in the green. I want to draw attention to the fact that the news background of recent weeks is sometimes unambiguous. How to relate to inflation if the main indicator decreases and the core one grows? Should we consider inflation to be falling or rising? Which of these indicators does the central bank focus more on? The market has confidently increased demand for the euro recently, but there has only sometimes been a news background for this. After all, the longer one of the currencies grows, the less effect new data supporting this currency brings.
Today, a retail sales report was released in the United States, which decreased by 1.0% in March m/m. Industrial production grew by 0.4%, with slightly lower market expectations. Demand for the US currency increased due to a decent production report, but what about retail sales? And such a picture has been observed for quite a long time. Reports are ambiguous or contradict each other, so it is difficult to clearly understand whether the market pays attention to the news background or whether it seems to us that it is playing out the news, but in fact, this is not the case.
General conclusions.
Based on the analysis, the formation of an upward trend section continues, taking on a three-wave form so far, and is expected to end soon. Therefore, now both sales and purchases can be equally advised. The news background does not answer which direction the pair will move. Wave analysis also needs to provide a clear answer. In the current situation, I would advise cautious purchases on MACD reversals “upwards.” A successful attempt to break through the 1.1033 mark downwards will indicate the possibility of opening sales.
On the senior wave scale, the wave markup of the ascending trend section has taken on an extended form but is likely completed. We saw five waves up, which are most likely the a-b-c-d-e pattern. The formation of the downward trend section may still need to be completed, and it can take any form in structure and duration.
The material has been provided by InstaForex Company – www.instaforex.com
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