EUR/USD. Analysis for November 1st. The dollar has been aiming for growth since the morning
November 1, 2023 4:22 pm
The wave analysis of the 4-hour chart for the euro/dollar pair remains quite clear. Over the past year, we have seen only three wave structures that constantly alternate with each other. For the past few months, I have regularly mentioned that I expect the pair to approach the 1.2000 level, where the construction of the last upward three-wave pattern began. This target was reached after a two-month decline. After reaching this target, the construction of a corrective wave 2 or b began, which has already taken on a clear three-wave pattern but could also develop into a five-wave pattern.
No matter what wave 2 or b eventually becomes, the overall decline of the European currency will not be completed, as it still requires the construction of a third wave in any case. Within the first wave, five internal waves are visible, so it is considered complete. Within the second wave, three waves are visible, so it may also be complete, but it may take the form of an a-b-c-d-e structure.
The United States maintains a high stance.
The euro/dollar pair decreased by 30 basis points on Wednesday. The decline in demand for the euro began in the morning, when there were no reports or events in the world. Consequently, the drop in the pair was not related to the news background. Only a few hours ago, significant reports on the labor market, vacancies, and business activity in the United States were released, which could either intensify the decline in the pair or halt it. As of now, they have halted it, but anything can happen during the remainder of the day. If the market was inclined towards sales in the morning, the statistics from the U.S. are unlikely to stop it. Most likely, we have seen a pause, which will end very quickly. However, in the evening, there is the FOMC meeting, and the market’s reaction to it can be very intense and unexpected.
Business activity in the U.S. manufacturing sector, according to the ISM, was unexpectedly disappointing. I remind you that similar S&P indices rose above the 50.0 mark, indicating a recovery in positive dynamics. However, the ISM indices are considered more important, and today it became known that business activity in the manufacturing sector decreased from 51.2 points to 46.8 points. Such a value can be considered a failure, and I believe that it was precisely because of this that the dollar temporarily stopped rising. The other reports were much more positive, and I will talk about them in the next articles. For now, I want to add that while reports are important, the FOMC meeting is even more important. It is entirely possible that Jerome Powell will be very pragmatic in the evening, and we will not see any reaction. But we can judge this in the evening or tomorrow.
General Conclusions.
Based on the analysis conducted, I conclude that the construction of a bearish set of waves continues. The targets near the 1.0463 level were ideally met, and the unsuccessful attempt to break through this level indicated a transition to the construction of a corrective wave. A successful attempt to break through the 1.0637 level, which corresponds to 100.0% according to Fibonacci, indicated the market’s readiness to complete the construction of wave 2 or b. However, this wave may take on a more complex form, so if selling is advisable, it should be done with small volumes. The main decline may start a little later.
On a larger wave scale, the upward trend structure has taken on an extended form but is likely to be completed. We have seen five upward waves that are most likely a structure of a-b-c-d-e. Further, the pair built four three-wave patterns: two down and two up. Now, it has probably entered the stage of building another extended three-wave pattern, but in a downward direction.
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. Over the past year, we have seen only three wave structures that constantly alternate with each other. For the past few months, I have regularly mentioned that I expect the pair to approach the 1.2000 level, where the construction of the last upward three-wave pattern began. This target was reached after a two-month decline. After reaching this target, the construction of a corrective wave 2 or b began, which has already taken on a clear three-wave pattern but could also develop into a five-wave pattern.
No matter what wave 2 or b eventually becomes, the overall decline of the European currency will not be completed, as it still requires the construction of a third wave in any case. Within the first wave, five internal waves are visible, so it is considered complete. Within the second wave, three waves are visible, so it may also be complete, but it may take the form of an a-b-c-d-e structure.
The United States maintains a high stance.
The euro/dollar pair decreased by 30 basis points on Wednesday. The decline in demand for the euro began in the morning, when there were no reports or events in the world. Consequently, the drop in the pair was not related to the news background. Only a few hours ago, significant reports on the labor market, vacancies, and business activity in the United States were released, which could either intensify the decline in the pair or halt it. As of now, they have halted it, but anything can happen during the remainder of the day. If the market was inclined towards sales in the morning, the statistics from the U.S. are unlikely to stop it. Most likely, we have seen a pause, which will end very quickly. However, in the evening, there is the FOMC meeting, and the market’s reaction to it can be very intense and unexpected.
Business activity in the U.S. manufacturing sector, according to the ISM, was unexpectedly disappointing. I remind you that similar S&P indices rose above the 50.0 mark, indicating a recovery in positive dynamics. However, the ISM indices are considered more important, and today it became known that business activity in the manufacturing sector decreased from 51.2 points to 46.8 points. Such a value can be considered a failure, and I believe that it was precisely because of this that the dollar temporarily stopped rising. The other reports were much more positive, and I will talk about them in the next articles. For now, I want to add that while reports are important, the FOMC meeting is even more important. It is entirely possible that Jerome Powell will be very pragmatic in the evening, and we will not see any reaction. But we can judge this in the evening or tomorrow.
General Conclusions.
Based on the analysis conducted, I conclude that the construction of a bearish set of waves continues. The targets near the 1.0463 level were ideally met, and the unsuccessful attempt to break through this level indicated a transition to the construction of a corrective wave. A successful attempt to break through the 1.0637 level, which corresponds to 100.0% according to Fibonacci, indicated the market’s readiness to complete the construction of wave 2 or b. However, this wave may take on a more complex form, so if selling is advisable, it should be done with small volumes. The main decline may start a little later.
On a larger wave scale, the upward trend structure has taken on an extended form but is likely to be completed. We have seen five upward waves that are most likely a structure of a-b-c-d-e. Further, the pair built four three-wave patterns: two down and two up. Now, it has probably entered the stage of building another extended three-wave pattern, but in a downward direction.
The material has been provided by InstaForex Company – www.instaforex.com
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