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The wave pattern of the EUR/USD pair has already completed its five-wave form. Thus, we can now expect the start of a new section of downward trend. If the current assumption is correct, then the quotes will further decline to the targets located around the 19th and 18th mark. However, we should remember that the demand for the US dollar in recent months has been extremely low, so the upward trend section of the trend might rather continue to be complicated.
At the same time, the wave pattern in the smaller time frame also indicates a possible completion of the upward section. The expected wave 5 in 5 managed to fully complete its form. Now, a successful attempt to break through the low of the expected wave 4 will indicate that the pair is ready to form the low of the three wave sections of the downward trend. Everything is pointing at the formation of a new trend segment which could indicate the beginning of a correction. In any case, I expect the quotes of the instrument to decline further.
Today's news background is very interesting and varied at the moment, but it failed to influence the EUR/USD pair. What are currently the focus of the markets? Initially, it is paying attention to Joe Biden's inauguration, which will be held on January 20 and, accordingly, Donald Trump's resignation. The inauguration is just a pure formality, since it has long been clear to everyone that Biden will be the new US president, and Trump's attempts to reverse the election have failed. However, the markets are worried that the Capitol attack last January 6 will repeat. In this case, many states called on a state of emergency. In Washington, DC troops are patrolling and many streets are closed. In general, there is a feeling that the country is not preparing for the president's inauguration, but for terrorist attacks. The FBI also mentioned that armed protests and marches are possible. These are certainly not terrorist attacks, but still very dangerous.
Secondly, some countries in the EU are going to strengthen, extend, or introduce quarantine measures/lockdown. For example, Austria has already announced the extension of quarantine until February 7, while Germany is preparing to introduce the so-called "mega-lockdown". It is expected that all transport will be stopped in the country, and a curfew will be imposed. The situation is similar in France, where a curfew has already been in force. At the same time, we can not say that there has been an increase in the number of cases of COVID-19 in recent weeks. Perhaps, the authorities know what we don't know or they are hiding the real numbers. Third, there is a political crisis in Italy, which may end in re-elections to Parliament. Eurosceptics' victory in this case is threatening, which will promote the idea of leaving the EU over the next few years. And this can naturally be dangerous both for the European Union and for the European currency. In general, there is a lot of news and events, but the instrument moves extremely calmly and exactly in accordance with the wave pattern. Apparently, the above-mentioned events do not affect the markets.
General conclusions and recommendations:
The EUR/USD pair is presumed to complete the formation of the upward section of the trend. Thus, I recommend selling it with the targets at 1.20 and 1.19, at each new sell signal of the MACD indicator. The current pattern does not look like a simple corrective wave, but rather the end of the upward trend. Therefore, several downward waves can be expected.
Díky analytickým přehledům společnosti InstaForex získáte plné povědomi o tržních trendech! Jako zákazníkovi společnosti InstaForex je Vám k dispozici velký počet bezplatných služeb umožňujících efektivní obchodování.
