2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
In this article, the EUR/USD wave analysis will be carried out. In addition to the facts themselves today, the whole history of the euro, its origin and strengthening as a currency will be told. At the end of the article, we will try to predict the future of this currency pair.
The emergence of the euro-dollar currency pair
The emergence of the European Union and the refusal of a number of European countries from their own currency in favor of the single euro currency, brought this currency to the top in demand. Some analysts even promised a widespread transition in settlements from the dollar to the euro. Naturally, this currency could not but become the subject of currency trading on the Forex market.
Analysis of historical quotes of a currency pair
At first, the wave analysis of the EUR/USD currency pair was not possible because there was not enough information. The price could be moved only by macroeconomic factors (fundamental data), as well as purely exchange methods of market makers. Over time, when some quotes history had already been created, EUR/USD wave analysis became possible on relatively small timeframes.
Since "Forex" as such has existed since 1976, although its modern form is significantly different, quotes in trading terminals at the beginning of their history reflect the relationship between the US dollar and the ECU currency. It was the first common European currency.
By the time of the introduction of cash, the euro had almost the lowest value. The value of the dollar, on the contrary, grew. Graphical analysis on large timeframes showed an uncertainty figure - a "wedge". Although more often this figure is a trend continuation figure, the fundamental and wave analysis of EUR/USD suggested the proximity of a trend change.
As most often happens, the beginning of a true trend begins with a false move. With the introduction of euro cash into circulation, its exchange quotations fell somewhat, but a month later the price stabilized and a gradual increase began. The historical low was not updated, and the price was at the bottom of the market. Trading volumes at the resulting local minimum fell significantly. The BCA system suggested that further decline was unlikely.
Wave analysis of EUR/USD pointed to the completion of the first eight-wave phase. Fibonacci extension lines could have been delayed, and subsequent history confirmed some key points in the development of the movement: there were significant delays in the form of resistance in the 162.262% area, as well as a bump around the 424 level.
Full impulse wave 2 had a progress of more than 500% in relation to the first, and its correction worked out 62% very accurately.
The development of the third impulsive subwave wasit is difficult to predict at certain price levels, as further progress has updated all-time highs. However, if you apply the basic definitions of wave analysis, you can clearly see the correction zones that did not touch the previous highs, and they clearly worked out the 62 and 162% Fibonacci lines, if we take the previous correction as 100%. The overall progress of the third sub-wave corresponded to 200% of the previous correction.
Current developments
The global crisis that followed such a significant growth of the euro led to its significant fluctuations against the dollar. If we apply the basic rules for building waves, we can say that the first wave of the fall was a little more than 50% of the previous growth (if we analyze the weekly chart), and its correction was almost 76% of the first impulse wave.
It is possible to say with a fairly high degree of probability that now we are at the exit from the second correction, that is, the third impulse wave is being formed. The first correction was in the form of a zigzag, while the second one was a complex structure of a horizontal flat.
Forecast of developments
The wave analysis of EUR/USD allows you to make some forecasts in the medium term. If the value of the first impulse is taken as 100%, then the second impulse will most likely end at the level of 162%. This level corresponds to the price of 0.9300. Since this price is close to the historical low, the third impulse wave will have a complex structure and may not update the low of the second impulse wave.(truncated wave) or only slightly lower it.
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