Analysis of EUR/USD on April 19. The ascending three-wave structure has most likely been completed.
April 19, 2023 2:22 pm
The wave markup of the 4-hour chart for the euro/dollar pair continues to become more complicated due to recent upward waves. These waves could be an independent upward trend section (as the last downward wave can be considered three-wave and completed), or they could be completed if it takes a three-wave form. Thus, the wave pattern for the euro currency may become very complex, and working with it isn’t easy. Forming an upward wave set may be completed at the current positions as the third wave’s peak goes beyond the first’s peak. The same thing was observed in the last downward formation. At the same time, there are other options for wave markup. For example, a complete five-wave (but also corrective) structure. Building on a scenario with a decrease in the pair is now appropriate because the ascending three-wave structure looks complete and finished. Therefore, at this time, the formation of a new downward three-wave structure may begin, and the unsuccessful attempt to break the 1.1030 level indicates the market’s readiness for sales.
Meaningless EU inflation report.
The euro/dollar pair dropped by 30 basis points on Wednesday. The amplitude of the movements was again not very strong, and the decline in the pair still needs to allow for making a confident conclusion about completing the formation of the upward wave set. The similarity is evident if we compare the ascending three-wave structure with the descending one. They are almost the same size. If we take a long-term view, neither the euro nor the dollar can boast of a news background that would support them. Thus, such alternating three-wave structures may be the most logical scenario at the current time.
Today, the European Union released an inflation report for March with a final estimate. It is worth noting that consumer price reports come out in two estimates. The second one is rarely of interest to the market because it usually coincides with the preliminary estimate. This was the case today. The report showed a slowdown to 6.9% y/y, the largest drop in the entire period of declining inflation. Demand for the European currency decreased during the day, but the wave markup suggests exactly such a scenario. The inflation report had no significance for the market today. Only “hawkish” rhetoric from ECB members can help the European currency. If Lane, Schnabel, or Lagarde, with de Guindos, begin to give unambiguous hints about another 50 basis point rate hike in May, this could bring buyers back to the market, who would lengthen the assumed wave c. Or the upward wave set will take a five-wave form. However, the euro currency has exhausted its growth potential. The European economy needs to be stronger to compete with the American one, and the rapid decline in inflation only reduces the likelihood of tightening policy by 50 points in May.
General conclusions.
The formation of the upward trend section is complete based on the analysis. Therefore, it is advisable to sell now, as the pair has a large space for a decline. The target of 1.0600 can be considered quite realistic. With this goal in mind, I advise selling the pair on MACD indicator reversals “down” until the quotes successfully attempt to break through the 1.1030 level, which may not happen.
On a larger wave scale, the wave markup of the ascending trend section has taken an extended form but is likely completed. We have seen five waves, most likely the a-b-c-d-e structure. The formation of the downward trend section may still need to be completed, and it can take any form in terms of structure and length.
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 become more complicated due to recent upward waves. These waves could be an independent upward trend section (as the last downward wave can be considered three-wave and completed), or they could be completed if it takes a three-wave form. Thus, the wave pattern for the euro currency may become very complex, and working with it isn’t easy. Forming an upward wave set may be completed at the current positions as the third wave’s peak goes beyond the first’s peak. The same thing was observed in the last downward formation. At the same time, there are other options for wave markup. For example, a complete five-wave (but also corrective) structure. Building on a scenario with a decrease in the pair is now appropriate because the ascending three-wave structure looks complete and finished. Therefore, at this time, the formation of a new downward three-wave structure may begin, and the unsuccessful attempt to break the 1.1030 level indicates the market’s readiness for sales.
Meaningless EU inflation report.
The euro/dollar pair dropped by 30 basis points on Wednesday. The amplitude of the movements was again not very strong, and the decline in the pair still needs to allow for making a confident conclusion about completing the formation of the upward wave set. The similarity is evident if we compare the ascending three-wave structure with the descending one. They are almost the same size. If we take a long-term view, neither the euro nor the dollar can boast of a news background that would support them. Thus, such alternating three-wave structures may be the most logical scenario at the current time.
Today, the European Union released an inflation report for March with a final estimate. It is worth noting that consumer price reports come out in two estimates. The second one is rarely of interest to the market because it usually coincides with the preliminary estimate. This was the case today. The report showed a slowdown to 6.9% y/y, the largest drop in the entire period of declining inflation. Demand for the European currency decreased during the day, but the wave markup suggests exactly such a scenario. The inflation report had no significance for the market today. Only “hawkish” rhetoric from ECB members can help the European currency. If Lane, Schnabel, or Lagarde, with de Guindos, begin to give unambiguous hints about another 50 basis point rate hike in May, this could bring buyers back to the market, who would lengthen the assumed wave c. Or the upward wave set will take a five-wave form. However, the euro currency has exhausted its growth potential. The European economy needs to be stronger to compete with the American one, and the rapid decline in inflation only reduces the likelihood of tightening policy by 50 points in May.
General conclusions.
The formation of the upward trend section is complete based on the analysis. Therefore, it is advisable to sell now, as the pair has a large space for a decline. The target of 1.0600 can be considered quite realistic. With this goal in mind, I advise selling the pair on MACD indicator reversals “down” until the quotes successfully attempt to break through the 1.1030 level, which may not happen.
On a larger wave scale, the wave markup of the ascending trend section has taken an extended form but is likely completed. We have seen five waves, most likely the a-b-c-d-e structure. The formation of the downward trend section may still need to be completed, and it can take any form in terms of structure and length.
The material has been provided by InstaForex Company – www.instaforex.com
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