Analysis of EUR/USD on August 28th. The euro continues to decline
August 28, 2023 5:25 pm
The wave analysis of the 4-hour chart for the euro/dollar pair remains quite clear. The entire ascending section of the trend, which began its construction last year, has taken on a complex structure. Over the past six months, we have only seen three-wave structures alternate. Recently, I’ve frequently mentioned that I expect the pair to approach the 5-figure mark, from where the construction of the last ascending three-wave had begun. I still stand by those words. Another ascending three-wave structure has been completed, so the market is now constructing a descending trend section.
Theoretically, the trend section starting on May 31 can still take on a five-wave look with the structure a-b-c-d-e. However, with each passing day, the chances of this are diminishing. The latest descending wave has already crossed the low of wave B. Most likely, we are seeing another descending set of waves, at least a three-wave set. Now, even this set’s first wave still needs to be completed. The news background remains weak for the euro.
Demand for the EU currency continues to fall.
The euro/dollar rate increased by five basis points on Monday, and the amplitude of the pair was 10–15 points. The pair is almost entirely stagnant today, with no news background. Based on these two facts, there must be something to analyze today. The pair has dropped to the 1.0787 mark, corresponding to 76.4% Fibonacci, but the attempt to break through was unsuccessful. However, I can’t even call this an “attempt.” On Friday, dollar demand sharply but slightly increased after Jerome Powell’s speech at the symposium in Jackson Hole. Yet, the Federal Reserve chairman didn’t say anything to make the US currency grow stronger. Thus, we are dealing with the continuation of the construction of the first wave of a new descending trend section, and I see no reason for its completion now.
As I mentioned, there was no significant event on Monday, so I suggest focusing on wave analysis. Wave A has already taken on a prolonged form and, in line with the size of all the previous waves, should conclude soon. However, I want to assume that the stronger and longer this wave is, the more potent the entire trend section will be. In this case, our targets are different from the 5-6 figure range. The overall fall of the European currency over the next six months or a year may be much stronger than I had envisioned a few months ago. I don’t rule out the possibility that the price will return to parity at 1.000.
General conclusions.
Based on the analysis, the construction of the ascending wave set is complete. Targets in the range of 1.0500–1.0600 are entirely realistic, and with these goals in mind, I recommend selling the pair. The a-b-c structure looks complete and convincing; therefore, it is finished. Hence, I recommend selling the pair with targets around the 1.0788 and 1.0637 marks. The construction of the descending trend section will continue, but a corrective wave might begin shortly.
On a larger wave scale, the wave marking of the ascending trend section has taken an extended form but is likely finished. We have seen five upward waves, which most likely form the a-b-c-d-e structure. Subsequently, the pair constructed four three-wave structures: two downward and two upward. Now, it has probably transitioned to building another descending three-wave structure.
The material has been provided by InstaForex Company – www.instaforex.com
The wave analysis of the 4-hour chart for the euro/dollar pair remains quite clear. The entire ascending section of the trend, which began its construction last year, has taken on a complex structure. Over the past six months, we have only seen three-wave structures alternate. Recently, I’ve frequently mentioned that I expect the pair to approach the 5-figure mark, from where the construction of the last ascending three-wave had begun. I still stand by those words. Another ascending three-wave structure has been completed, so the market is now constructing a descending trend section.
Theoretically, the trend section starting on May 31 can still take on a five-wave look with the structure a-b-c-d-e. However, with each passing day, the chances of this are diminishing. The latest descending wave has already crossed the low of wave B. Most likely, we are seeing another descending set of waves, at least a three-wave set. Now, even this set’s first wave still needs to be completed. The news background remains weak for the euro.
Demand for the EU currency continues to fall.
The euro/dollar rate increased by five basis points on Monday, and the amplitude of the pair was 10–15 points. The pair is almost entirely stagnant today, with no news background. Based on these two facts, there must be something to analyze today. The pair has dropped to the 1.0787 mark, corresponding to 76.4% Fibonacci, but the attempt to break through was unsuccessful. However, I can’t even call this an “attempt.” On Friday, dollar demand sharply but slightly increased after Jerome Powell’s speech at the symposium in Jackson Hole. Yet, the Federal Reserve chairman didn’t say anything to make the US currency grow stronger. Thus, we are dealing with the continuation of the construction of the first wave of a new descending trend section, and I see no reason for its completion now.
As I mentioned, there was no significant event on Monday, so I suggest focusing on wave analysis. Wave A has already taken on a prolonged form and, in line with the size of all the previous waves, should conclude soon. However, I want to assume that the stronger and longer this wave is, the more potent the entire trend section will be. In this case, our targets are different from the 5-6 figure range. The overall fall of the European currency over the next six months or a year may be much stronger than I had envisioned a few months ago. I don’t rule out the possibility that the price will return to parity at 1.000.
General conclusions.
Based on the analysis, the construction of the ascending wave set is complete. Targets in the range of 1.0500–1.0600 are entirely realistic, and with these goals in mind, I recommend selling the pair. The a-b-c structure looks complete and convincing; therefore, it is finished. Hence, I recommend selling the pair with targets around the 1.0788 and 1.0637 marks. The construction of the descending trend section will continue, but a corrective wave might begin shortly.
On a larger wave scale, the wave marking of the ascending trend section has taken an extended form but is likely finished. We have seen five upward waves, which most likely form the a-b-c-d-e structure. Subsequently, the pair constructed four three-wave structures: two downward and two upward. Now, it has probably transitioned to building another descending three-wave structure.
The material has been provided by InstaForex Company – www.instaforex.com
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