EUR/USD. Analysis for October 23rd. The euro continues to build a corrective wave
October 23, 2023 5:23 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 continuously alternate with each other. For the last few months, I have regularly mentioned that I expect the pair to approach the 1.5 figure, where the construction of the last upward three-wave structure began. This target was achieved after a two-month decline. The presumed first wave of the new downtrend segment may continue its development, although there are currently some signs of its completion.
None of the recent price increases resembled a complete Wave 2 or B. Therefore, they were all internal correction waves within Wave 1 or A. However, the overall decline of the European currency will not be completed since the construction of the third wave is still required in any case. Inside the first wave, five internal waves are already visible, so it may be complete. The failed attempt to break the 1.0463 level, which equates to 127.2% according to Fibonacci, marked the beginning of the construction of a corrective wave.
The euro is making slow progress upwards, but it is moving.
The euro/dollar exchange rate unexpectedly increased by 50 basis points on Monday, and the range of movements was quite high. On this day, there were no significant or interesting events scheduled, which is why I refer to the rise of the European currency as “unexpected.” However, when you look at the wave analysis, it becomes clear that nothing is strange. I have been saying for several weeks that the corrective wave must consist of three waves, as the first wave of the new downtrend segment was very extended. After such a strong and prolonged decline, a single corrective wave of 200 basis points is insufficient.
Therefore, the market did not wait for favorable news but immediately got down to business on Monday. Undoubtedly, this wave can complete its formation around the 1.0637 level, where its internal first wave ended. But I still expect a successful attempt to break through and further increase the euro. If there is no breakout, we will receive a strong signal to construct Wave 3 or C, which can also be quite extensive. Since there was no news background today but the euro still rose, I believe that the news and reports this week will not significantly affect market sentiment. If the market is inclined toward a correction, the correction will continue regardless of news and reports. Therefore, everything now depends on the 1.0637 level.
General Conclusions:
Based on the analysis conducted, I conclude that the construction of a downward wave set is ongoing. The targets around the 1.0463 level have been ideally hit, and the failed 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 because the likelihood of constructing an upward wave is high now. A failed attempt to break through the 1.0637 level, corresponding to 100.0% according to Fibonacci, will indicate the market’s readiness to complete the construction of Wave 2 or B. In this case, I recommend new sales.
On a larger wave scale, the upward wave analysis took on an extended form, but it is likely completed. We have seen five upward waves, which most likely represent a structure of a-b-c-d-e. The pair then constructed four three-wave structures: two down and two up. Now it has probably moved into the stage of constructing another more extended 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. Over the past year, we have seen only three wave structures that continuously alternate with each other. For the last few months, I have regularly mentioned that I expect the pair to approach the 1.5 figure, where the construction of the last upward three-wave structure began. This target was achieved after a two-month decline. The presumed first wave of the new downtrend segment may continue its development, although there are currently some signs of its completion.
None of the recent price increases resembled a complete Wave 2 or B. Therefore, they were all internal correction waves within Wave 1 or A. However, the overall decline of the European currency will not be completed since the construction of the third wave is still required in any case. Inside the first wave, five internal waves are already visible, so it may be complete. The failed attempt to break the 1.0463 level, which equates to 127.2% according to Fibonacci, marked the beginning of the construction of a corrective wave.
The euro is making slow progress upwards, but it is moving.
The euro/dollar exchange rate unexpectedly increased by 50 basis points on Monday, and the range of movements was quite high. On this day, there were no significant or interesting events scheduled, which is why I refer to the rise of the European currency as “unexpected.” However, when you look at the wave analysis, it becomes clear that nothing is strange. I have been saying for several weeks that the corrective wave must consist of three waves, as the first wave of the new downtrend segment was very extended. After such a strong and prolonged decline, a single corrective wave of 200 basis points is insufficient.
Therefore, the market did not wait for favorable news but immediately got down to business on Monday. Undoubtedly, this wave can complete its formation around the 1.0637 level, where its internal first wave ended. But I still expect a successful attempt to break through and further increase the euro. If there is no breakout, we will receive a strong signal to construct Wave 3 or C, which can also be quite extensive. Since there was no news background today but the euro still rose, I believe that the news and reports this week will not significantly affect market sentiment. If the market is inclined toward a correction, the correction will continue regardless of news and reports. Therefore, everything now depends on the 1.0637 level.
General Conclusions:
Based on the analysis conducted, I conclude that the construction of a downward wave set is ongoing. The targets around the 1.0463 level have been ideally hit, and the failed 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 because the likelihood of constructing an upward wave is high now. A failed attempt to break through the 1.0637 level, corresponding to 100.0% according to Fibonacci, will indicate the market’s readiness to complete the construction of Wave 2 or B. In this case, I recommend new sales.
On a larger wave scale, the upward wave analysis took on an extended form, but it is likely completed. We have seen five upward waves, which most likely represent a structure of a-b-c-d-e. The pair then constructed four three-wave structures: two down and two up. Now it has probably moved into the stage of constructing another more extended descending three-wave structure.
The material has been provided by InstaForex Company – www.instaforex.com
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