American Dollar: Weekly Preview

Ben Graham · Novembro 9

The American currency has been rising in value for over a month, but confidence in its stable future has waned. After the last five weeks, it remains extremely difficult to pinpoint why the demand for the U.S. dollar has been slowly but steadily growing. However, wave analysis can partially answer this question. Both instruments have seen the construction of corrective wave sets, within which the dollar's strength occurred. Currently, the likelihood of these trend segments reaching completion is high, suggesting that the market may return to its usual activity—selling the American currency.

Given that many recent news items have either been ignored by the market or interpreted solely in favor of the dollar, I do not believe that the news backdrop will significantly influence market sentiment next week. A series of important reports will again be missed due to the U.S. "shutdown," which is unlikely to conclude anytime soon. Specifically, reports on October inflation, unemployment claims, the producer price index, and changes in retail sales volumes will not be released. So, what will be published?

Nothing. According to the current event calendar, no reports are scheduled for release in the U.S. There are also no new speeches from Jerome Powell expected, meaning there should be nothing to prevent the dollar from declining. The market may finally begin to account for the news backdrop it has ignored for five consecutive weeks, particularly the "shutdown," the Fed's interest rate cuts, and the ongoing deterioration in the labor market.

Wave Picture for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument continues to construct a bullish segment of the trend. In recent months, the market has taken a pause, but the policies of Donald Trump and the Fed remain significant factors for the future decline of the U.S. currency. The targets for the current segment of the trend may reach up to the 25 figure. Currently, construction of corrective wave 4 continues, taking on a highly complex, elongated form. Its latest internal structure, a-b-c-d-e, is near completion or has already been completed. Thus, I am considering buying again, as all recent downward structures appear corrective.

Wave Picture for GBP/USD:

The wave picture for the GBP/USD instrument has changed. We continue to deal with a bullish, impulsive segment of the trend, but its internal wave structure is becoming more complex. Wave 4 has taken on a three-wave form, resulting in a very elongated structure. The downward corrective structure a-b-c-d-e in c of 4 is presumably nearing completion. I expect the main wave structure to resume its development with initial targets around the 38 and 40 figures.

Key Principles of My Analysis:

Wave structures should be simple and clear. Complex structures can be difficult to interpret and often undergo changes.
If there is no confidence in what is happening in the market, it is better not to enter it.
There can never be 100% certainty in the direction of movement. Don't forget about protective Stop Loss orders.
Wave analysis can be combined with other types of analysis and trading strategies.

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