Wave Analysis EUR / USD: Past, Present and Future

In this article, the EUR / USD wave analysis will be conducted. In addition to the facts themselves, 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 appearance of the European Union and the rejection of a number of European countries from their own currency in favor of the single currency of the euro, led this currency to the leaders on demand. Some analysts even promised a general transition in the calculations from the dollar to the euro. Naturally, this currency could not become the subject of currency trading on the Forex market.

Analysis of historical quotations of a currency pair

First, a wave analysis of the EUR / USD currency pair was impossible, because there was not enough information. The price could only move macroeconomic factors (fundamental data), as well as purely market methods of market makers. Over time, when some history of quotations was already created, the wave analysis of EUR / USD became possible on relatively small timeframes.

Since "Forex" as such existed since 1976, although its modern appearance is significantly different, quotes in trading terminals at the beginning of its history reflect the relationship between the US dollar and the currency of the ECU. It was the first pan-European currency.

By the time of introduction of cash, the euro had a practically minimal cost. The value of the dollar, on the contrary, grew. Graphical analysis on large timeframes showed a figure of uncertainty - "wedge." Although more often this figure is a figure of 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 the true trend begins with a false movement. With the introduction of the euro in circulation, its stock quotes fell slightly, but after a month the price stabilized, and a gradual increase began. The historical minimum was not updated, and the price was at the bottom of the market. The volume of trading on the local minimum was significantly reduced. The ICA system suggested that further fall is unlikely.

The EUR / USD wave analysis indicated the completion of the first eight-wave phase. It was possible to postpone the Fibonacci extension lines, and subsequent history confirmed some key points in the development of the movement: there were significant delays in the form of resistance in the area of 162, 262%, and also a blubber around the level of 424%.

The total impulse wave No. 2 had progressed more than 500% with respect to the first, and its correction very accurately worked 62%.

The development of the third impulse 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 the Fibonacci lines 62 and 162%, if you take the previous correction for 100%. The overall progress of the third subwave corresponded to 200% of the previous correction.

Current developments

Following the significant growth of the euro, the global crisis caused significant fluctuations in its relation to the dollar. If we apply the basic rules of wave construction, we can say that the first wave of fall was slightly more than 50% of the previous growth (if you 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 now we are on the way out of the second correction, that is, a third impulse wave is being formed. The first correction had the form of a zigzag, the second one is a complex structure of a horizontal flat.

Forecast of the development of events

Wave analysis of EUR / USD allows making some forecasts in the mid-term. If the value of the first impulse is taken as 100%, then the second impulse will end, most likely in the 162% level region. 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.