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Forex Analysis & Reviews: EUR/USD. Analysis for December 7. The European economy grew in the third quarter
time 07.12.2022 04:32 PM
time Relevance up to, 08.12.2022 04:25 PM

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The wave marking on the euro/dollar instrument's 4-hour chart still appears to be quite accurate, but the entire upward section of the trend is becoming more convoluted. It has already assumed a clear corrective and somewhat prolonged form. We have obtained a complex correction structure of waves a-b-c-d-e, in which wave e has a much more complex form than the first four waves. Since wave e is much higher than the peak of wave C, if the wave markings are accurate, construction on this structure may be nearly finished. In this instance, it is anticipated that we will construct at least three waves downward, but if the most recent phase of the trend is corrective, the subsequent phase will probably be impulsive. Therefore, I am preparing for a new, significant decline in the instrument. The market will be ready to sell when a new attempt to breach the 1.0359 level, which corresponds to 261.8% Fibonacci, is successful. The last decline of the instrument, however, is not the first wave of a new descending section; rather, the rise in the instrument's quotes over the past few weeks suggests that the entire wave e may end up being longer. Consequently, the scenario involving the first two waves of a new downward trend segment is rejected. Because there is no increase in demand for US currency, the wave pattern starts to become muddled and complex.

The euro currency is once more in high demand.

On Wednesday, the euro/dollar instrument increased by 65 basis points. The demand for the euro fell on Monday and Tuesday, which raised new hopes for forming a downward correction wave. At least one, not to mention the entire trend segment. However, the market started to increase demand for the euro once more on Wednesday, so I can't say that the wave e is over. Therefore, at this time, the entire upward section of the trend, which already appears to be too extended, is still being built and will continue to be built for as long as is required.

The third-quarter GDP report for the European Union was the primary factor in the movement of the euro on Wednesday. Despite the market expecting 0.2%, the growth was 0.3% quarter over quarter. This report may cause an additional downward wave attempt to fail. Today's news should come to an end, but the most crucial event has already taken place. The tool keeps getting bigger and bigger, taking us farther and farther from the outcome I'm hoping for. There may not have been any corrective structures during the construction of any section if we think back to how the two-year downward trend section was built. The tool can only occasionally construct individual correction waves. But as I already mentioned, these structures make forecasting very difficult. On the one hand, the trend is fantastic. On the other hand, ascending and descending sections ought to alternate, according to wave analysis. When the ECB and the Fed meet for the last time this year, the situation will change, but for the time being, there is more hope than expectation.

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Conclusions in general

The upward trend section's construction has grown more intricate and is almost finished. As a result, I suggest making sales with targets close to the estimated 0.9994 level, or 323.6% Fibonacci. The likelihood of this scenario is increasing, and there is a chance that the upward portion of the trend will become even more extended and complicated.

The wave marking of the descending trend segment becomes more intricate and lengthens at the higher wave scale. The a-b-c-d-e structure is most likely represented by the five upward waves we observed. After the construction of this section is finished, work on a downward trend section may resume.

Chin Zhao,
Analytical expert of InstaForex
© 2007-2023
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