Relevance up to 08:00 2022-03-28 UTC–4
The wave marking of the 4-hour chart for the euro/dollar instrument still does not change and looks convincing. At this time, the construction of the proposed wave E is continuing, which should take a five-wave form. The low of the previous wave was broken, so the construction of a downward trend section continues. Since wave E has already taken on a sufficiently extended form, a scenario appears in which the construction of this wave will soon be completed. However, so far, the internal wave marking of wave E indicates that wave 4 has now been completed and the construction of wave 5 has begun. To get confirmation of the start of the construction of wave 5, you need to wait for a successful attempt to break through the 1.0948 mark, which corresponds to 161.8% Fibonacci. Going below the low of wave b at 4 will also confirm the construction of a new downward wave. Otherwise, wave 4 in E can still take the five-wave form a-b-c-d-e. I am not considering alternative wave markup options yet, since there are no serious violations in the current markup.
The market is divided into optimists and pessimists, but both the first and the second are waiting.
The euro/dollar instrument fell by 10 basis points on Friday. Market activity by the end of the week fell almost to zero, which is visible on almost all charts. The direction of movement has also disappeared, now the tool moves horizontally. This is partly due to the news background, which was not much this week. By which I mean both economic and geopolitical. What was interesting this week? Only the UK inflation report, which had nothing to do with the euro or the dollar. Jerome Powell’s performance? He reported only what the market had been expecting for a long time. Christine Lagarde’s speech is nothing new at all. I would say that there was even more geopolitical news, but the market reacts to them in a rather peculiar way.
In the case of geopolitics, everything depends on the shock into which the market plunges when it receives this or that news. When it became known on February 24 that Russia had invaded Ukraine, the markets collapsed and continued to fall almost every next day. But over time, the situation has normalized, and now it will take very strong and important news to make the market panic again. Such news may be the de-escalation of the conflict, the expansion of the conflict in geographical terms, the entry into it of other countries besides Russia and Ukraine. And I must say that there are many candidates to participate in this conflict. For two weeks in a row, the media have been writing that Belarusian troops are preparing to help the Russian army. At the same time, Poland is increasing the presence of NATO troops on its territory, creating defense detachments, and increasing the number of its troops. Joe Biden visited Poland and NATO bases yesterday, where he met with the US military and opaquely hinted that they could get to Ukraine themselves. Warsaw insists on the introduction of a peacekeeping mission to Ukraine. Thus, the conflict can easily expand. At the same time, Biden promised that America would replace Europe with all Russian gas much earlier than 2030. And the move of Vladimir Putin, who said that now Europe will pay for gas and oil in rubles, did not work, because in Brussels they immediately said that there are supply contracts in which the payment currencies are spelled out.
Based on the analysis, I conclude that at this time the construction of wave E continues. If so, now is still a good time to sell the European currency with targets located around the 1.0723 mark, which corresponds to 200.0% Fibonacci, for each MACD signal “down”. The current wave layout still assumes the construction of wave 5 in E.
On a larger scale, it can be seen that the construction of the proposed wave D has been completed, and the instrument has already updated its low. Thus, the fifth wave of a non-pulse downward trend section is being built, which may turn out to be as long as wave C. If this assumption is correct, then the European currency will still decline.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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