The wave structure of the 4-hour chart for the euro/dollar pair remains quite clear. Over the past year, we have seen only three-wave structures that constantly alternate with each other. Over the past few months, I have regularly mentioned that I expect the pair to reach around the 1.5 level, from which the construction of the last upward three-wave movement began. This target was reached after a two-month decline. The assumed first wave of the new downward trend can continue its construction, although there are currently certain signs of its completion.

None of the recent price increases resembled a full-fledged wave 2 or b. Therefore, all of these were internal corrective waves in 1 or a. If this is indeed the case, the decline in prices may continue for some time during this wave. And that won't be the end of the overall decline of the European currency, as the construction of the third wave is still required. Inside the first wave, five internal waves are already visible, so its completion is approaching. An unsuccessful attempt to break through the 1.0463 level, which is equivalent to 127.2% according to Fibonacci, indicates the market's readiness to start building a corrective wave.

The euro/dollar currency pair rose by 45 basis points on Wednesday. Demand increased today, but only slightly. Such a movement clearly does not imply the completion of the first wave. Nevertheless, together with the testing of the 1.0463 level, the chances of building wave b increase. However, if the news background could have supported the European currency, it simply refuses to do so, resulting in a continuous decline of the Eurozone currency.

A good example of this is today. The Business Activity Index in the EU in September rose to 48.7, but any value below 50.0 is considered negative. The Business Activity Index in Germany rose to 50.3, but Germany is just one country out of 27 in the eurozone. Retail sales declined by 1.2% in August on a monthly basis, while markets expected a decrease of no more than 0.3% m/m. The producer price index increased by 0.6%, which does not provide any special conclusions. As a result, several reports did not support the euro, although theoretically the market could have interpreted this data in favor of the euro. It could have, but it didn't. Therefore, the market is not yet inclined to buy, and the news background for the euro remains weak. The hope for building wave b is currently associated only with the 1.0463 level and the length of the first wave, which has already overlapped the entire previous three-wave structure.

General Conclusions

Based on the analysis conducted, I conclude that the construction of a bearish set of waves continues. The targets in the range of 1.0500–1.0600 have been ideally worked out, but the decline may continue for some time. Since the attempt to break through the 1.0463 level is currently unsuccessful, I would advise against rushing with new sales but gradually getting rid of old ones. The likelihood of starting an upward wave is high. After breaking through 1.0463, selling the euro can be considered with targets around the 1.0242 level, which corresponds to 161.8% according to Fibonacci.

On a larger wave scale, the wave labeling of the ascending segment of the trend has taken on an extended form, but it is probably complete. We have seen five upward waves, which are most likely the structure of a-b-c-d-e. Next, the pair built four three-wave structures: two down and two up. Now, it has probably entered the stage of constructing another extended downward three-wave structure.