Forex Analysis & Reviews: 05.04.2024 - Analysis of EUR/USD. April...

InstaForex Loprais Team - Official participant of the Dakar rally

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InstaForex Loprais Team - Official participant of the Dakar rally

05.04.2024 05:37 PM

Analysis of EUR/USD. April 5th. There is still no positive news from the E

The wave analysis of the 4-hour chart for the EUR/USD pair remains unchanged. At the moment, we are observing the construction of the assumed wave 3 in 3 or c of the downward trend section. If this is indeed the case, then the decline in quotes will continue for a very long time, as the first wave of this section completed its construction around the 1.0450 mark. Therefore, the third wave of this trend section should end even lower.

The market continues to reduce demand for the euro at a very slow pace as if doubting its actions, although the news background fully supports the US dollar. The unsuccessful attempt to break through the 1.0955 mark, which is equivalent to 61.8% according to Fibonacci, indicated the completion of the construction of wave 2 in 3 or c. Therefore, the pair has the potential for decline, and it is significant.

Is there a probability of a different wave analysis? Yes, it always exists. However, if since October 3rd of last year, we have been observing a new upward trend section, then the previous downward wave does not fit into any structure, which cannot be. Therefore, an upward section is possible only with a strong complication of wave analysis.

Buyers resisted for a long time but couldn't hold on

The EUR/USD pair rate decreased by 35 basis points on Wednesday, and it must be said that this is very little. Here, the epithet "only" is quite appropriate because, on the strongest Nonfarm Payrolls and unemployment reports in the US, the dollar rose by only 35 points. I remind you that for most of this week, the US currency was under market pressure, although the news background much more supported it than the euro. We saw good ADP, JOLTS, ISM reports, learned about Jerome Powell's updated view on monetary policy (which did not lose its "hawkishness"), witnessed the "dovish" ECB minutes (which could have been even more "dovish" if the ECB officials had seen the latest inflation report in early March). And despite all this, demand for the euro was rising, while demand for the US dollar was falling.

So here comes Friday, and the American currency rose by several dozen points, which looks like a mockery of common sense and logic. After all, not only the news background but also the wave analysis indicates the need for the pair's decline. It turns out that two of the most important types of analysis simultaneously point down, but the market doesn't notice it. With this state of affairs, analyzing the pair becomes meaningless, as logical forecasts do not come true.

In the EU today, by the way, one report on retail trade was released, which, as usual, turned out to be negative and below market expectations. But even this did not confuse market participants, who continued to keep demand for the euro high in the first half of the day.

General conclusions

Based on the analysis of EUR/USD, the construction of a downward set of waves continues. Waves 2 or b and 2 in 3 or c are completed, so in the near future, I expect the continuation of the construction of an impulse downward wave 3 in 3 or c with a significant decrease in the pair. I continue to consider sales with targets around the calculated mark of 1.0462, which corresponds to 127.2%, according to Fibonacci.

On a larger wave scale, the assumed wave 2 or b, which in length exceeded 61.8% according to Fibonacci from the first wave, may be completed. If this is indeed the case, then the scenario with the construction of wave 3 or c and a decrease in the pair below the 4th figure has begun to be implemented.

The main principles of my analysis:

Wave structures should be simple and understandable. Complex structures are difficult to play with; they often bring changes.
If there is confidence in what is happening in the market, it is better to avoid entering it.
There is never 100% certainty about the direction of movement. Don't forget about Stop Loss orders for protection.
Wave analysis can be combined with other types of analysis and trading strategies.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.