EUR/USD. Analysis for September 6th. EU retail sales persistently decline
September 6, 2023 4:25 pm
The wave analysis of the 4-hour chart for the euro/dollar pair remains quite clear. The ascending trend, which began building last year, has taken on a complex structure, with the last six months showing only alternating three-wave structures. Recently, I’ve regularly mentioned that I expect the pair to reach around the 1.5 figure, where the construction of the last upward three-wave movement began. I still stand by my words. Another ascending three-wave structure is complete, so the market continues to build a downward trend.
The recent increase in quotes does not resemble a full-fledged wave 2 or b. We saw a similar wave from August 3rd to August 10th. Most likely, this is an internal corrective wave 1 or a. If this is the case, the decline in quotes will continue for some time as part of the first wave of the downward trend, which will be extensive. This is not the end of the euro’s decline, as constructing the third wave is still required.
Wednesday did not bring any surprises, and the euro fell again.
The euro/dollar pair’s exchange rate dropped by 10 basis points on Wednesday. The decline could have been even more significant, but there was an ascending corrective wave in the first half of the day, so the overall decline turned out to be small. However, the essence of what is happening in the market remains the same. Demand for the euro currency continues to decline, and the first wave of a new downward trend continues to develop. Since the decline in the euro is gradual, it may last for quite some time. The nearest target is 1.0636.
In the European Union, the only report of the day was retail trade. This indicator decreased again every month by 0.2%. On an annual basis, the decrease was 1%. Market expectations generally coincided with the report’s values. Nevertheless, statistics from the European Union once again did not please, and Christine Lagarde’s statements in the first two days of the week suggest that the ECB is inclined to soften its hawkish stance. Together, these factors are causing a decline in demand for the euro, which is fully consistent with the current wave analysis.
Based on all of the above, I expect further declines in quotes. There will be few significant events this week, but the market sentiment is clearly “bearish.” Since there is no reason to buy the pair, expecting its growth would be naive. An unsuccessful attempt to break through the 1.0636 level may become the starting point for corrective wave 2 or b. Central bank meetings will begin next week, so we can expect higher market activity and larger price swings.
General Conclusions:
Based on the analysis, the construction of the upward wave set is complete. I still believe that targets around 1.0500–1.0600 are quite realistic. Therefore, I recommend selling the pair with targets around 1.0636 and 1.0483. A successful attempt to break through the 1.0788 level indicates the market’s readiness to continue selling. We can expect the achievement of the abovementioned targets, which I have discussed for several weeks and months.
On the larger wave scale, the wave labeling of the ascending trend has taken on an extended form but is likely complete. We have seen five upward waves, most likely constituting the structure a-b-c-d-e. Further, the pair has built four three-wave structures: two downward and two upward. Now, it has probably transitioned to the stage of constructing 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 ascending trend, which began building last year, has taken on a complex structure, with the last six months showing only alternating three-wave structures. Recently, I’ve regularly mentioned that I expect the pair to reach around the 1.5 figure, where the construction of the last upward three-wave movement began. I still stand by my words. Another ascending three-wave structure is complete, so the market continues to build a downward trend.
The recent increase in quotes does not resemble a full-fledged wave 2 or b. We saw a similar wave from August 3rd to August 10th. Most likely, this is an internal corrective wave 1 or a. If this is the case, the decline in quotes will continue for some time as part of the first wave of the downward trend, which will be extensive. This is not the end of the euro’s decline, as constructing the third wave is still required.
Wednesday did not bring any surprises, and the euro fell again.
The euro/dollar pair’s exchange rate dropped by 10 basis points on Wednesday. The decline could have been even more significant, but there was an ascending corrective wave in the first half of the day, so the overall decline turned out to be small. However, the essence of what is happening in the market remains the same. Demand for the euro currency continues to decline, and the first wave of a new downward trend continues to develop. Since the decline in the euro is gradual, it may last for quite some time. The nearest target is 1.0636.
In the European Union, the only report of the day was retail trade. This indicator decreased again every month by 0.2%. On an annual basis, the decrease was 1%. Market expectations generally coincided with the report’s values. Nevertheless, statistics from the European Union once again did not please, and Christine Lagarde’s statements in the first two days of the week suggest that the ECB is inclined to soften its hawkish stance. Together, these factors are causing a decline in demand for the euro, which is fully consistent with the current wave analysis.
Based on all of the above, I expect further declines in quotes. There will be few significant events this week, but the market sentiment is clearly “bearish.” Since there is no reason to buy the pair, expecting its growth would be naive. An unsuccessful attempt to break through the 1.0636 level may become the starting point for corrective wave 2 or b. Central bank meetings will begin next week, so we can expect higher market activity and larger price swings.
General Conclusions:
Based on the analysis, the construction of the upward wave set is complete. I still believe that targets around 1.0500–1.0600 are quite realistic. Therefore, I recommend selling the pair with targets around 1.0636 and 1.0483. A successful attempt to break through the 1.0788 level indicates the market’s readiness to continue selling. We can expect the achievement of the abovementioned targets, which I have discussed for several weeks and months.
On the larger wave scale, the wave labeling of the ascending trend has taken on an extended form but is likely complete. We have seen five upward waves, most likely constituting the structure a-b-c-d-e. Further, the pair has built four three-wave structures: two downward and two upward. Now, it has probably transitioned to the stage of constructing another descending three-wave structure.
The material has been provided by InstaForex Company – www.instaforex.com
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