In the most global sense, the wave counting of the EUR/USD instrument has undergone certain changes in recent days. If earlier, I hoped that the upward trend section would not become more complex, then a successful attempt to break through the previous high led to the fact that the wave counting required adjustments.
Thus, the supposed wave 4 took on a pronounced three-wave form, and the instrument proceeded to building wave 5 at 5 at 3 or C, which at the moment may already be completed, since the breakout of the previous maximum took place. This means this wave can complete its construction in some moment.
The wave counting on a smaller scale refines the data obtained from a higher scale. An attempt to break through the peak of the supposed wave 3 turned out to be successful, but as mentioned above, wave 5 can now end at any moment. At the same time, the quotes of the instrument may continue to rise if the wave 5 in 5 in 3 or C takes a complex and extended form. That is, in spite of the fact that the current wave counting looks quite complete again and now presupposes the construction of a correction wave 4, the instrument can easily resume an upward movement.
On Wednesday, August 19, the European Union became aware of the consumer price index for July, which amounted to -0.4% m / m and 0.4% y / y. These numbers are extremely weak, however, in accordance with the wave counting in the first half of the day, the euro continued to rise. But in the afternoon, a landslide began. The instrument had already lost about 70 points by the evening. Thus, the release of “minutes” by the FRS cannot be the reason for the growth of the US dollar. Moreover, the very tone of the “minutes” was not positive.
Monetary committee members acknowledged that a new monetary stimulus is likely to be needed to restore the economy. To simply put it, the Fed or Congress will have to inject additional hundreds of billions and trillions of dollars into the economy so that it continues to recover and does not slow down. Furthermore, All members of the monetary committee acknowledged that the future of the American economy is entirely dependent on the COVID-19 epidemic, on new waves of the pandemic, on the success of the fight against the epidemic and on government actions. Thus, the future of the economy is not thoroughly determined, such is the main result of the FRS minutes.
There will be no important events or reports in the European Union on Thursday. In America, there is only a report today – on claims for unemployment benefits, which is unlikely to attract the attention of the markets. Thus, nothing should prevent the US currency from continuing to grow. However, I cannot assume that the upward trend has completed its construction until the successful attempt to break the low of the supposed wave 4.
General conclusions and recommendations:
The euro/dollar pair resumed the construction of the assumed global wave 3 or C. Thus, at this time, I recommend new purchases of the instrument with targets located near the calculated level of 1.2089, which corresponds to 323.6% Fibonacci, for each MACD signal up. At the same time, wave 5 in 5 in 3 or C can end literally at any moment (or already be completed), then the construction of a correctional wave 4 or a new downward trend section will begin.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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