Euro Currency: Preview of the Week

[Ben Graham]

If the upcoming week were not a holiday, I would call it the most boring of the year. Since the market has just celebrated Christmas and the New Year is next week, a news lull should come as no surprise. In the Eurozone and Germany, only the business activity indices for the manufacturing sectors will be released on Friday. However, I doubt anyone in the market will act on the final assessments of business activity for December after Thursday's holiday. Therefore, it can be considered that there will be no news next week.

In the absence of news, we can only rely on wave analysis or Fibonacci levels. I remind you that we saw a three-wave upward structure, with the third wave taking a clear five-wave form. Consequently, in the next week or two, a corrective wave four may be forming, or a new set of downward waves may begin. In the latter case, global wave four could take on an even more complex and extended form. Frankly, I wouldn't want that, as in this scenario, the sideways movement could last for another couple of months. However, the market is unlikely to be concerned with what other traders or I want.

Wave Structure of EUR/USD:

Based on the conducted analysis of EUR/USD, I conclude that the instrument continues to build the bullish segment of the trend. Donald Trump's policies and the Fed's monetary policy remain significant factors in the long-term decline of the American currency. The targets of the current trend segment may extend up to the 25th figure. The current upward wave pattern is developing, and we hope we are now witnessing the formation of an impulse wave set that is part of global wave 5. In this case, we should expect growth towards targets around 1.1825 and 1.1926, corresponding to 200.0% and 261.8% on the Fibonacci retracement.

Wave Structure of GBP/USD:

The wave structure of the GBP/USD instrument has changed. The downward corrective structure a-b-c-d-e in C of 4 appears to be complete, as does the entire wave 4. If this is indeed the case, I expect the primary trend segment to resume its development, with initial targets around the 38 and 40 levels.

In the short term, I anticipated the formation of wave 3 or c, with targets around 1.3280 and 1.3360, corresponding to 76.4% and 61.8% of the Fibonacci retracement. These targets have been reached. Wave 3 or c continues its formation, and currently, a fourth attempt to break the 1.3450 mark (equivalent to 61.8% on the Fibonacci retracement) is underway. Movement targets are 1.3550 and 1.3720.

Core Principles of My Analysis:

1. Wave structures should be simple and understandable. Complex structures are difficult to trade and often require adjustments.
2. If there is uncertainty about what is happening in the market, it is better not to enter it.
3. There is never 100% certainty in the direction of movement, and there never can be. Don't forget about protective stop-loss orders.
4. Wave analysis can be combined with other forms of analysis and trading strategies.

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