Forex analysis review
Forex analysis review |
| Posted: 30 Apr 2022 06:18 AM PDT
The wave marking of the 4-hour chart for the euro/dollar instrument continues to look convincing. The instrument continues to build a descending wave 5-E, which may be the last in the structure of the descending trend segment. If this is true, then the decline in the quotes of the euro currency may continue for several more weeks, since this wave may turn out to be very long, with five waves in its internal structure. At the moment, this wave no longer looks shortened, and five waves are not visible inside it yet. Therefore, I believe that it will continue its construction for some time. A successful attempt to break through the 1.0721 mark, which equates to 200.0% by Fibonacci, indicates that the market is ready for further sales of the euro currency. In the coming days, the instrument may decline to the level of 1.0355, and only 350 basis points will remain at price parity with the dollar. An unsuccessful attempt to break through the 1.0355 mark may mean that the market is ready to build a corrective wave of 5-E. Presumably the fourth wave, since now three waves are visible inside 5-E. I am not considering alternative wave marking options yet. European inflation continues to rise. The euro/dollar instrument rose by 50 basis points on Friday. However, I cannot draw any conclusions in this regard. This increase is too small to conclude the completion of the downward trend segment, or at least about the completion of the construction of a downward wave. This increase is too small to indicate a change in market sentiment. This increase is too small to conclude that the market is ready to buy the euro currency. It doesn't say anything. It's just that on Friday the market recorded a part of the profit on sales, that's all. The news on Friday was very interesting for the euro currency. The consumer price index rose to 7.5% y/y, as well as to 3.5% y/y if we take prices excluding fuel, energy, and food. One way or another, fast or slow, inflation in the European Union continues to grow. Since it is mainly growing now due to geopolitics, and the Ukrainian-Russian conflict, there is no reason to assume that this value is the maximum that the market can see. The European energy crisis is only at the first stage. Now the European Union is considering all possible options for abandoning Russian oil and gas, and Russia, meanwhile, has begun to refuse to export gas to certain European countries that do not want to pay in rubles. Everything is going to the fact that oil and gas supplies from Russia to Europe will only decrease, sanctions will tighten, and prices will rise. Consequently, inflation in Europe may continue to increase. Also yesterday, a report on GDP in the first quarter was released. Its growth was minimal, only 0.2%. Last quarter it was 0.3%. The European economy is quite weak, so I very much doubt that the ECB will go for a rate hike this year. Maybe the rate will be raised once or twice, but hardly more, because the main thing now is not to put additional pressure on a weak economy.General conclusions. Based on the analysis, I still conclude that the construction of wave 5-E. If so, now is still a good time to sell the European currency with targets located around the 1.0355 mark, which corresponds to 261.8% Fibonacci, for each MACD signal "down". In the near future, the construction of a new internal correction wave of 5-E may begin, which may be the fourth.
On a larger scale, it can be seen that the construction of the proposed wave D has been completed, and the instrument regularly updates its low. Thus, the fifth wave of a non-pulse downward trend section is being built, which may turn out to be as long as wave C. If this assumption is correct, then the European currency will still decline. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 30 Apr 2022 06:18 AM PDT
For the pound/dollar instrument, the wave markup continues to look very convincing and does not require adjustments. The downward section of the trend continues its construction within the framework of wave E-E, and its internal wave marking looks quite difficult - correction waves are practically not viewed in it, so it is very difficult to determine which internal wave is being built now. Presumably, wave 3-e-E. Thus, the wave e-E will not be shortened. Demand for the British continues to fall, and wave e already looks quite long. However, this wave is the last wave of the current downtrend segment. The entire site is either nearing completion of its construction, or it will have to take a much more complex and extended form. Everything will depend in the coming weeks on the news background, which is now clearly divided into geopolitical and economic. The military conflict between Ukraine and Russia, according to many military analysts, may persist not just for months, but for years. The consequences for the European and British economies will be serious. From an economic point of view, the Bank of England looks weaker in its desire to tighten the PEPP than the Fed. But still, these two factors cannot permanently lower the demand for the pound.The US GDP was disappointed, but the British did not grow because of it. The exchange rate of the pound/dollar instrument increased by 120 basis points on April 29. Thus, both of the instruments I am considering rose identically on Friday. From my point of view, this suggests that the market simply recorded a profit on sales of both instruments. Because of this, there was a pullback upward, which in both cases can be a corrective wave, after which the main movement will resume. On Friday, there was no such news background that the pound began to be sharply in demand and gained 120 points. Thus, I believe that the decline in quotes will resume next week, and now we need to rely on the wave markup in the first place. Next week, there will be a meeting of the British Central Bank, at which, according to analysts, it will announce the fourth consecutive increase in the interest rate, again by 0.25%. If everything was in order with geopolitics now, then I would not doubt that the demand for the British will grow after this decision is made. But at this time, when the Bank of England has already raised the rate three times, and the pound has been falling and falling, I am not at all sure that the market will be happy with the fourth increase. Nevertheless, I admit that the end of next week, when in addition to the meeting of the Bank of England, the Nonfarm Payrolls report in the USA will be released, will be very hot. And the market will not be able to stay away from these events. However, I believe that there is still more chance of a further decline in the British dollar than the completion of the entire downward section of the trend. General conclusions. The wave pattern of the pound/dollar instrument still assumes the construction of wave E. I continue to advise selling the instrument with targets located around the 1.2246 mark, which corresponds to 127.2% Fibonacci, according to the MACD signals "down". However, I don't see a pound below this mark yet. From my point of view, the construction of a downward trend section is nearing its completion, but this assumption requires at least one confirmation.
On the higher scale, wave D looks complete, but the entire downward section of the trend does not. Therefore, I still expect a continuation of the decline of the instrument with targets located around the 22nd figure. Wave E takes on a five-wave appearance but still doesn't look fully equipped. However, it already takes a little time to complete the complete set. The material has been provided by InstaForex Company - www.instaforex.com |
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