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Wave analysis of EUR/USD for October 4. Markets are ready for growth but only on a corrective wave

Wave pattern

analytics615b27d81d838.jpg

The wave counting of the 4-hour chart for the EUR/USD has undergone certain changes. After the quotes fell below the low of the previous wave, it became clear that the construction of the downward trend section is resumed. Consequently, it was necessary to make such adjustments that would involve a section of the a-b-c-d-e trend, which was formed from the very beginning of the year. I believe that this section can be considered wave A, and the subsequent increase can be considered wave B. If this is indeed the case, then the construction of the proposed wave C has now begun, which can take a very extended form, given the size of the wave A. At the same time, the entire section of the trend may again take the corrective three-wave form A-B-C. Thus, the probability of further decline of the instrument remains high, since only one wave is visible inside wave C, and it should turn out to be at least three-wave. At this time, I'm counting on building wave b in C.

Lagarde's speech and Nonfarm Payrolls

There was no news for the euro on Monday. After a rather long decline in the quotes of the instrument, the moment has long overdue when an upward correction should begin. I believe that now the news background does not have much influence on the wave count. All the meetings of the central banks were left behind. The speeches of Jerome Powell and Christine Lagarde last week did not give any fundamentally new information. And this week there will be very little news and reports that the markets can work out. All the most interesting data will be released on Friday, when the unemployment rate, changes in the level of average wages, and Nonfarm Payrolls will be known in the United States.

The markets should also be interested in the ADP report on the change in the number of employees on Wednesday. Thus, this week can be called "the week of news about the US labor market", as two important reports will be released at once. As I said, the news background doesn't really matter to the markets right now. For example, the ADP report is very rarely used by markets to strengthen or weaken their positions. It is considered the second most important after Nonfarm Payrolls report - which will be released on Friday. Also this week, a report from the last ECB meeting will be released and a speech by ECB President Christine Lagarde will take place. However, I am not counting on these events very much. Lagarde already made a speech several times last week, and each time the markets reacted very coolly to her words.

General conclusions

Based on the analysis, I conclude that the construction of the downward wave C will continue for some time. Therefore, now I advise selling the instrument for each signal from the MACD "down" with targets located near the calculated marks of 1.1608 and 1.1540, which corresponds to 50.0% and 61.8% Fibonacci levels. However, now we need to wait for the completion of the construction of the proposed wave b in C, after which the decline in quotes should resume.

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The wave counting of the higher scale looks quite convincing. The decline in quotes continues and now the downward section of the trend, which originates on May 25, takes the form of a three-wave corrective structure A-B-C. Thus, the decline may continue for several more months until wave C is fully completed.

The material has been provided by InstaForex Company - www.instaforex.com