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24.05.2024 06:12 PM
Analysis of EUR/USD pair on May 24, 2024

The wave analysis of the 4-hour chart for the EUR/USD pair remains unchanged. At the moment, we observe the formation of the presumed wave 3 in 3 or c of the downtrend segment. If this is the case, the decline in quotes will continue for quite some time, as the first wave of this segment completed its formation around the 1.0450 mark. Therefore, the third wave of this trend segment should end below it.

The 1.0450 mark is the target only for the third wave. If the current downtrend segment becomes impulsive, then we can expect five waves in total, and the euro could well drop below the 1.0000 mark. Of course, it is quite difficult to expect such a development now, but over the past years, there have been enough surprises in the currency market. Anything is possible.

Is it possible to change the wave analysis? However, if we have been observing a new uptrend segment since October 3 of last year, then the previous downtrend wave does not fit into any structure. Therefore, an upward segment is possible only with a significant complication of the wave analysis. In recent weeks, the pair has only been rising, jeopardizing the integrity of the wave pattern.

The 1.0880 mark held up only against the initial pressure from buyers.

The EUR/USD pair rate increased by 30 basis points on Friday. Today, we saw another example that vividly demonstrates the inability of the euro to decline. No matter what happens with the economies of the European Union or America, the market considers only purchases. Over the past week, the pair has barely declined by 70-80 basis points. This week, Christine Lagarde stated that the ECB is ready to lower interest rates, while the FOMC minutes showed that the American regulator is not ready to lower rates. However, demand for the US currency still needs to increase. On Friday, the volume of orders for durable goods in the US turned out to be significantly better than market expectations, which also did not lead to the strengthening of the dollar.

Based on the above, the market has developed a very strange situation. The wave analysis indicates the formation of a downtrend wave, the news background often supports the dollar, but demand has been increasing only for the euro in the past month. Below the 1.0880 mark, I still consider a decline in the pair and sales, but in case of a successful attempt to break this mark, the pair's growth will continue, and the entire wave pattern will likely require adjustments.

Overall Conclusions:

Based on the analysis of EUR/USD, the formation of a downtrend wave set continues. In the near future, I expect the resumption of the formation of an impulsive downtrend wave 3 in 3 or c with a significant decrease in the pair. I expect a favorable moment for new sales with targets around the calculated mark of 1.0462. An unsuccessful attempt to break the 1.0880 mark, corresponding to 61.8% according to Fibonacci, may indicate the market's readiness for new sales.

On a larger wave scale, it can be seen that the presumed wave 2 or b, which in length exceeded 61.8% according to Fibonacci of the first wave, may have ended. If this is indeed the case, then the scenario with the formation of wave 3 or c and a decrease in the pair below the 4th figure has begun to be implemented.

Key Principles of My Analysis:

  1. Wave structures should be simple and understandable. Complex structures are difficult to play out and often change.
  2. If there is confidence in what is happening in the market, it is better to avoid entering.
  3. There is never 100% certainty in the direction of movement. Remember protective orders like Stop Loss.
  4. Wave analysis can be combined with other types of analysis and trading strategies.
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