EUR/USD. Analysis for August 24th. The euro struggles with market pressure
August 24, 2023 5:22 pm
The wave analysis of the 4-hour chart for the euro/dollar pair remains clear. The entire upward section of the trend, which started its formation last year, has taken on a complex structure. Over the past six months, we have only seen alternate three-wave structures. Recently, I expect the pair to approach the 5th figure, from which the last ascending three-wave started. I still stand by my words. The next upward three-wave structure has been completed, so the market has formed a downward trend segment.
Theoretically, the trend segment that began on May 31 could still take a five-wave form with an a-b-c-d-e structure, but with each passing day, the chances for this are diminishing. We will likely see another downward wave set, at least three waves long. At the moment, even the first wave of this set has yet to finish. The news background is weak for the euro and unlikely to stimulate demand this week. Fibonacci levels are being breached one after another, indicating the market’s readiness for new sales every time.
American statistics didn’t tarnish the dollar’s picture. The euro/dollar rate on Thursday dropped by 20 basis points. As we see, the pair’s decline continues, partly fueled by the news backdrop. Recall that yesterday’s business activity indices in the European Union were disappointing, but so were the business activity indices in the USA. However, the decline in the US indices was less pronounced, so the formation of a downward wave as part of the new downward trend segment continues. Nothing is hindering the construction of this wave, although it has already become quite extended.
Today, the pair’s decline could have been much stronger if not for the report on durable goods orders in the USA. It showed a reduction in volumes by 5.2%, with market expectations of -4.2%. On the other hand, the number of initial unemployment claims was 230,000, compared to market expectations of 240,000. One report was stronger than the forecast, and the other was weaker. There needs to be more for the pair to begin the construction of a corrective wave, which is overdue. It’s hard to say how long the pair’s decline will continue, but not many significant events left this week could influence market sentiment. In any case, after the completion of the corrective wave, I expect a new decline, within which the pair will drop to at least the 6th figure. As we approach the next ECB meeting, demand for the US currency will continue to decline.
Overall Conclusions:
Based on the analysis, the construction of the upward wave set is completed. Targets in the range of 1.0500-1.0600 are quite realistic, and with these targets, I advise selling the pair. The a-b-c structure appears complete and convincing and is therefore finished. Thus, I recommend selling the pair with targets around the 1.0788 and 1.0637 marks. The construction of the downward trend segment will continue, and a successful attempt at 1.0880 indicates the market’s readiness for new sales.
On a larger wave scale, the wave marking of the upward trend segment took an extended form but is likely completed. We saw five upward waves, which most likely represent an a-b-c-d-e structure. The pair then formed four three-wave patterns: two downward and two upward. It has entered the phase of constructing another downward 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 clear. The entire upward section of the trend, which started its formation last year, has taken on a complex structure. Over the past six months, we have only seen alternate three-wave structures. Recently, I expect the pair to approach the 5th figure, from which the last ascending three-wave started. I still stand by my words. The next upward three-wave structure has been completed, so the market has formed a downward trend segment.
Theoretically, the trend segment that began on May 31 could still take a five-wave form with an a-b-c-d-e structure, but with each passing day, the chances for this are diminishing. We will likely see another downward wave set, at least three waves long. At the moment, even the first wave of this set has yet to finish. The news background is weak for the euro and unlikely to stimulate demand this week. Fibonacci levels are being breached one after another, indicating the market’s readiness for new sales every time.
American statistics didn’t tarnish the dollar’s picture. The euro/dollar rate on Thursday dropped by 20 basis points. As we see, the pair’s decline continues, partly fueled by the news backdrop. Recall that yesterday’s business activity indices in the European Union were disappointing, but so were the business activity indices in the USA. However, the decline in the US indices was less pronounced, so the formation of a downward wave as part of the new downward trend segment continues. Nothing is hindering the construction of this wave, although it has already become quite extended.
Today, the pair’s decline could have been much stronger if not for the report on durable goods orders in the USA. It showed a reduction in volumes by 5.2%, with market expectations of -4.2%. On the other hand, the number of initial unemployment claims was 230,000, compared to market expectations of 240,000. One report was stronger than the forecast, and the other was weaker. There needs to be more for the pair to begin the construction of a corrective wave, which is overdue. It’s hard to say how long the pair’s decline will continue, but not many significant events left this week could influence market sentiment. In any case, after the completion of the corrective wave, I expect a new decline, within which the pair will drop to at least the 6th figure. As we approach the next ECB meeting, demand for the US currency will continue to decline.
Overall Conclusions:
Based on the analysis, the construction of the upward wave set is completed. Targets in the range of 1.0500-1.0600 are quite realistic, and with these targets, I advise selling the pair. The a-b-c structure appears complete and convincing and is therefore finished. Thus, I recommend selling the pair with targets around the 1.0788 and 1.0637 marks. The construction of the downward trend segment will continue, and a successful attempt at 1.0880 indicates the market’s readiness for new sales.
On a larger wave scale, the wave marking of the upward trend segment took an extended form but is likely completed. We saw five upward waves, which most likely represent an a-b-c-d-e structure. The pair then formed four three-wave patterns: two downward and two upward. It has entered the phase of constructing another downward three-wave structure.
The material has been provided by InstaForex Company – www.instaforex.com
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