Analysis of EUR/USD. October 17th. Economic statistics didn’t worsen the euro’s situation
October 17, 2023 5:23 pm
The wave analysis on the 4-hour chart for the euro/dollar pair remains quite clear. Over the past year, we’ve only seen three-wave structures that constantly alternate with each other. In recent months, I’ve regularly mentioned that I expect the pair to reach around the 1.5 figure, from where the construction of the last upward three-wave movement began. This target was achieved after a two-month decline. The assumed first wave of the new downward trend may continue its formation, although there are certain signs of its completion at the moment.
None of the recent price increases resembled a full-fledged wave 2 or b. Therefore, all of these were internal corrective waves within wave 1 or a. If this is indeed the case, the decline in prices may continue for some time during this wave. The overall decline of the European currency won’t be completed yet, as the construction of the third wave is still needed. Inside the first wave, five internal waves are already discernible, so it may be completed. The unsuccessful attempt to break through the level of 1.0463, which is equivalent to 127.2% according to Fibonacci, indicates the market’s readiness to start building a correction wave.
The economic statistics didn’t significantly affect the euro but also didn’t worsen the situation.
The euro/dollar pair’s rate remained unchanged on Tuesday. Throughout the day, demand for the European Union currency alternated between rising and falling, but overall, we can talk about the continuation of the construction of correction wave 2 or b. At this time, its internal wave “c” may be under construction. I’ve previously mentioned that wave 2 or b should take on a three-wave form; otherwise, it risks becoming another internal correctional wave within wave 1 or a. So far, everything is going exactly as I described in the scenario.
The news background today was not strong but also not weak. The ZEW economic sentiment index in Germany was -1.1, which is much higher than expected. A similar index in the European Union was 2.3, also significantly higher than market expectations. The demand for the euro increased after these reports, but not too significantly. In the United States, retail sales increased by 0.7% in September, which is also above market expectations, and industrial production increased by 0.3%, which is also better than forecasts. Therefore, in the second half of the day, demand increased for the dollar, and in general, neither the euro nor the dollar significantly improved their positions on Tuesday. However, the most important thing is that the market didn’t change its mood, and the corrective wave may continue its formation. During the day, there were other interesting events, which I will discuss in future reviews.
General conclusions:
Based on the analysis conducted, I conclude that the construction of a descending set of waves continues. The targets around the level of 1.0463 have been perfectly achieved, and the unsuccessful attempt to break this level indicates the market’s readiness to build a corrective wave. In my recent reviews, I warned that it is worth considering closing short positions since the probability of building an ascending wave is high now. The unsuccessful attempt to break through the level of 1.0637, which corresponds to 100.0% according to Fibonacci, indicates the market’s readiness to resume the decline, but I think wave 2 or b will be a three-wave structure on the larger wave scale.
On a larger wave scale, the wave analysis of the ascending segment of the trend has taken on an extended form but is likely to be completed. We’ve seen five upward waves, which most likely constitute a structure of a-b-c-d-e. The pair then built four three-wave movements: two downwards and two upwards. Now, it has likely entered the stage of constructing another extended three-wave downward structure.
The material has been provided by InstaForex Company – www.instaforex.com
The wave analysis on the 4-hour chart for the euro/dollar pair remains quite clear. Over the past year, we’ve only seen three-wave structures that constantly alternate with each other. In recent months, I’ve regularly mentioned that I expect the pair to reach around the 1.5 figure, from where the construction of the last upward three-wave movement began. This target was achieved after a two-month decline. The assumed first wave of the new downward trend may continue its formation, although there are certain signs of its completion at the moment.
None of the recent price increases resembled a full-fledged wave 2 or b. Therefore, all of these were internal corrective waves within wave 1 or a. If this is indeed the case, the decline in prices may continue for some time during this wave. The overall decline of the European currency won’t be completed yet, as the construction of the third wave is still needed. Inside the first wave, five internal waves are already discernible, so it may be completed. The unsuccessful attempt to break through the level of 1.0463, which is equivalent to 127.2% according to Fibonacci, indicates the market’s readiness to start building a correction wave.
The economic statistics didn’t significantly affect the euro but also didn’t worsen the situation.
The euro/dollar pair’s rate remained unchanged on Tuesday. Throughout the day, demand for the European Union currency alternated between rising and falling, but overall, we can talk about the continuation of the construction of correction wave 2 or b. At this time, its internal wave “c” may be under construction. I’ve previously mentioned that wave 2 or b should take on a three-wave form; otherwise, it risks becoming another internal correctional wave within wave 1 or a. So far, everything is going exactly as I described in the scenario.
The news background today was not strong but also not weak. The ZEW economic sentiment index in Germany was -1.1, which is much higher than expected. A similar index in the European Union was 2.3, also significantly higher than market expectations. The demand for the euro increased after these reports, but not too significantly. In the United States, retail sales increased by 0.7% in September, which is also above market expectations, and industrial production increased by 0.3%, which is also better than forecasts. Therefore, in the second half of the day, demand increased for the dollar, and in general, neither the euro nor the dollar significantly improved their positions on Tuesday. However, the most important thing is that the market didn’t change its mood, and the corrective wave may continue its formation. During the day, there were other interesting events, which I will discuss in future reviews.
General conclusions:
Based on the analysis conducted, I conclude that the construction of a descending set of waves continues. The targets around the level of 1.0463 have been perfectly achieved, and the unsuccessful attempt to break this level indicates the market’s readiness to build a corrective wave. In my recent reviews, I warned that it is worth considering closing short positions since the probability of building an ascending wave is high now. The unsuccessful attempt to break through the level of 1.0637, which corresponds to 100.0% according to Fibonacci, indicates the market’s readiness to resume the decline, but I think wave 2 or b will be a three-wave structure on the larger wave scale.
On a larger wave scale, the wave analysis of the ascending segment of the trend has taken on an extended form but is likely to be completed. We’ve seen five upward waves, which most likely constitute a structure of a-b-c-d-e. The pair then built four three-wave movements: two downwards and two upwards. Now, it has likely entered the stage of constructing another extended three-wave downward structure.
The material has been provided by InstaForex Company – www.instaforex.com
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