Wave analysis of EUR/USD for September 1. ADP report sparks new US dollar sales


The wave counting of the 4-hour chart for the Euro/Dollar instrument remains unchanged as before. The instrument still passes no more than 50 points per day and moves in almost only one direction. Over the past nine days, the instrument has already gained about 200 basis points, which gives very good reasons to assume the completion of the construction of a downward trend section. Its internal wave counting looks quite convincing. The wave counting of the assumed wave e also looks very convincing. Thus, in my opinion, the construction of a new upward section of the trend has begun, which may also turn out to be corrective. So far, we are talking about building a three-wave section of the trend. If this assumption is correct, then the first wave may turn out to be very long (it can be compared with the descending waves of the previous downward section). And the final target will lie near the maximum of the previous upward section of the trend, that is, around the mark of 1.2266. I am not considering the option with the complication of the downward set of waves yet.

The news background for the Euro/Dollar instrument was already quite strong on Wednesday. Reports on unemployment and business activity in the manufacturing sector were released in the European Union. It turned out that the unemployment rate fell by 0.2% and amounted to 7.6% in July. Business activity in the manufacturing sector decreased by only 0.1 points and amounted to 61.5 in August. Thus, the reports from Europe cannot be called weak. The demand for the European currency remained low but stable. Also, the ADP report on the change in the number of people employed in the US economy was released. It was this report that had the greatest impact on the mood of the markets. It turned out that the number of workers in the private sector increased by 374K in August, although the markets expected an increase of 640K.

Thus, the US currency did not receive support from this report, and the ISM manufacturing index did not attract the proper attention of the markets, since it practically did not differ from the value of last month. Thus, the markets paid the most attention to the labor market in the United States. And as we can see, its weakness in August caused a decrease in demand for the US currency. Thus, I expect a strong reaction from the markets to the Nonfarm Payrolls report this Friday, which is considered an even more important report than ADP. The US labor market is now of interest to everyone, since the Fed's determination to curtail the economic stimulus program directly depends on its state. Thus, the weaker the labor market recovery, the longer the Fed will not announce the end of QE, the less reason the markets have to buy the dollar.

Based on the analysis, I conclude that the construction of the downward section could have ended around the level of 1.1704, which is equal to 100.0% according to Fibonacci. So now I'm still waiting for the construction of an upward set of waves. There are no signs of resuming and complicating the construction of a downward trend section right now, so I recommend buying the instrument with targets located near the 1.1917 mark, which corresponds to 61.8% Fibonacci, for each MACD signal "up".


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. However, the last section of the trend quite unexpectedly took a more complex form, but it still ended (presumably) in the same place as the previous three-wave section.

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