09.05.202417:06 Forex Analysis & Reviews: Analysis of EUR/USD pair on May 9th. Euro woke up after the Bank of England meeting

The wave analysis of the 4-hour chart for the EUR/USD pair remains unchanged. Currently, we observe the construction of the presumed wave 3 in 3 or C of the downtrend segment. If this is the case, the decline in quotes will continue for quite a while, as the first wave of this segment completed its construction around the 1.0450 mark. Therefore, the third wave of this trend segment should end below.

The 1.0450 mark is the target only for the third wave. If the current downtrend segment becomes impulsive, we can expect five waves, and the euro may decline below the 1.0000 mark. Of course, it is currently quite difficult to expect such a development of events, but there have been enough surprises in the currency market over the past years. Anything is possible.

Is there a probability of a change in wave analysis? It always exists. However, if, since October 3rd of last year, we have observed a new uptrend segment, then the last downward wave does not fit into any structure, which cannot be. Therefore, an upward segment is possible only with a significant complication of the wave analysis. Such a scenario seems unlikely, so I will proceed with the basic analysis.

The euro failed to overcome an important mark.

The EUR/USD rate rose by several tens of points on Thursday, but movements on Thursday and this week can now be described in just one word - "strange." Let's go in order. From the beginning of the week, the pair's range was minimal. The market showed that it did not see any reasons for making trading transactions. This may be logical, as there was no news background these days. But I want to remind you that there are more important reasons for the euro's decline than statistics from the US and the EU. And these reasons are so strong that demand for the European currency should continue to decline at much higher rates.

Today, the market was waiting for the Bank of England meeting, although this event is more related to the British currency than to the European one. However, I admit that the euro often reacts to the outcomes of its "neighbor's" meeting. After the publication of the press release on the Bank of England's website, the euro began to rise, so it could be thought that the British regulator made "hawkish" decisions. However, in reality, Andrew Bailey stated that the regulator will have to switch to a softer policy in the coming quarters, and inflation will decrease, according to the central bank's forecasts. Two members of the BofE voted to lower the interest rate, one more than at the previous meeting. In my opinion, there were even more "dovish" factors for the pound today than "hawkish" ones, but at the same time, demand is growing for the euro. However, it is not excluded that this is the market's initial reaction, and by the evening, we will see a decline in both pairs.

General conclusions.

Based on the analysis conducted for EUR/USD, the construction of a bearish wave set continues. Waves 2 or b and 2 in 3 or C have been completed, so I expect a resumption of constructing an impulsive downward wave 3 in 3 or C with a significant decrease in the pair. I consider sales with targets near the calculated mark of 1.0462, as the news background favors the dollar. The unsuccessful attempt to break through the 1.0787 mark, equivalent to 76.4% Fibonacci, indicates the market's readiness for new sales.

On a larger wave scale, it can be seen that the presumed wave 2 or b, which in length exceeded 61.8% Fibonacci of the first wave, so it may be completed. If this is the case, the scenario with the construction of wave 3 or C and the decline of the pair below the 4-figure mark has begun to be implemented.

The main principles of my analysis:

1. Wave structures should be simple and understandable. Complex structures are difficult to play out; they often change.
2. If there is confidence in what is happening in the market, it is better to avoid entering it.
3. There is never 100% certainty about the direction of movement. Remember about Stop Loss protective orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.