Wave analysis of EUR/USD for August 4. ADP labor market data didn't upset the markets too much


The wave counting of the 4-hour chart for the Euro/Dollar instrument looks quite clear and unambiguous around this moment. The instrument continues to increase quotes but continues to do so with a minimum amplitude. This movement is very similar to an independent wave, which may be the first part of a new upward trend section. Thus, at the moment, the expected wave c and the entire downward section of the trend are considered completed. If this assumption is correct, then the price increase will continue with the targets located near the 20th figure and the level of 1.2065, which corresponds to 50.0% and 38.2% Fibonacci. The final targets of the entire upward trend segment are located near the highs of the previous upward trend segment. However, given the current amplitude of the instrument, it can move to its targets within a few months. I am not considering the option of complicating the downward trend section yet.

The news background for the Euro/Dollar instrument slightly strengthened on Wednesday compared to Monday and Tuesday. In the eurozone, the business activity index for the services sector was released, which fell from 60.4 base points to 59.8. The composite index was also released, which fell from 60.6 points to 60.2. In addition, a report on retail trade was released in June, which only fell 0.1% short of market expectations. Thus, in general, all these reports can be considered almost completely neutral. And the lack of market reaction to them is a logical combination of circumstances. Now, unto the much important economic data. In the US, a report on the change in the number of employees from ADP was released, which many pay close attention to. This report rarely correlates with Nonfarm Payrolls, so its low value does not mean that the next Nonfarm report in two days will also be weak.

However, the markets did not pay due attention to the ADP report, although it turned out to be more than 2 times worse than expectations. The markets, of course, responded with an increase in demand for the instrument, which led to an increase of 30 points, but can this be called a reaction? The ISM index unexpectedly caused a much stronger reaction, as it amounted to 64.1 points against expectations of 60.5. Thus, the European reports were neutral, and the American ones were followed by a reaction, but strong only on the ISM index. The markets are waiting for other, more important information, but in the calendar of events for this week, only Nonfarm Payrolls reports and the unemployment rate in the United States are planned. Nothing else is important. So now all the attention is on Friday.

Based on the analysis, I conclude that the construction of the descending wave c is completed. Thus, as I said earlier, it is now possible to buy the pair with targets located near the nearest Fibonacci levels. These levels are 1.1919 and 1.1983, which corresponds to 61.8% and 50.0% Fibonacci. I recommend making purchases for each new MACD signal "up". An unsuccessful attempt to break through the 76.4% Fibonacci level indirectly indicates that the markets are not ready for new sales.


The wave counting of the higher scale looks quite convincing. We see three three-wave sections of the trend, which are approximately the same in size. This gives reason to assume that the last downward trend section is really completed. If this is true, then we can expect an increase in the quotes of the instrument in the coming weeks by 200-300 basis points.

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