This article will conduct a wave analysis of EUR / USD. In addition to the facts themselves today, the whole history of the euro will be told, its origin and strengthening as a currency. At the end of the article we will try to predict the future of this currency pair.
The emergence of the currency pair euro-dollar
The emergence of the European Union and the rejection of a number of European countries of their own currency in favor of a single currency, the euro, brought this currency to the leaders in demand. Some analysts even promised a widespread transition in the calculations from the dollar to the euro. Naturally, this currency could not but become the subject of foreign exchange trading on the Forex market.
Analysis of historical quotes of a currency pair
At first, a wave analysis of the EUR / USD currency pair was impossible, because there was not enough information. The price could be moved only by macroeconomic factors (fundamental data), as well as purely exchange techniques of market makers. Over time, when a certain history of quotes was already created, a wave analysis of EUR / USD became possible on relatively small timeframes.
Since Forex, as such, has existed since 1976, although its modern appearance 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 pan-European currency.
By the time cash was introduced, the euro had a practically minimal cost. The value of the dollar, on the contrary, grew. Graphical analysis on large time frames showed a figure of uncertainty - a "wedge". Although more often this figure is a figure of the continuation of the trend, the fundamental and wave analysis of EUR / USD suggested the proximity of the trend change.
As often happens, the beginning of a true trend begins with a false movement. With the introduction of cash euros, its stock quotes fell slightly, but a month later the price stabilized and a gradual increase began. The historical minimum was not updated, and the price was at the bottom of the market. Trading volumes at the resulting local minimum fell significantly. The ICA system suggested that a further fall is unlikely.
The wave analysis of EUR / USD indicated the completion of the first eight-wave phase. The Fibonacci extension lines could be postponed, and subsequent history confirmed some key points in the development of the movement: there were significant delays in the form of resistance in the region of 162, 262%, and also a chatter around the level of 424%.
The full impulse wave No. 2 had more progress than 500% with respect to the first, and its correction worked very accurately for 62%.
The development of the third impulsive subwave was difficult to predict at certain price levels, as further progress updated historical highs. However, if you apply the basic definitions of wave analysis, you can clearly notice the correction zones that did not touch the previous highs, and they clearly worked out the Fibonacci lines of 62 and 162%, if we take the previous correction for 100%. The overall progress of the third subwave corresponded to 200% of the previous correction.
Current developments
The global crisis following such a significant increase in the euro led to significant fluctuations in the dollar against the dollar. If we apply the basic rules for building waves, we can say that the first wave of the fall was slightly more than 50% of the previous growth (if we analyze the weekly chart), and its correction was almost 76% of the first impulse.
It is possible to say with a fairly high degree of probability that we are now at the exit from the second correction, that is, a third impulse wave is forming. The first correction was in the form of a zigzag, the second is the complex structure of the horizontal flat.
Development forecast
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 end, most likely, in the region of the level of 162%. This level corresponds to the price of 0.9300. Since this price is close to the historical minimum, the third impulse wave will have a complex structure and may not update the minimum of the second impulse wave (truncated wave) or only slightly lower it.