The wave structure on the 4-hour chart for the EUR/USD pair has taken on a not very desirable appearance, but it still raises no questions. There is still no talk of canceling the upward section of the trend that began in January of last year; only the internal wave structure is occasionally being adjusted. In my opinion, the pair has completed the formation of the global wave 4 (lower chart). If this assumption is correct, then wave 5 is currently being formed, which may become quite extended, with targets stretching up to the 25th level.
The internal wave structure of the presumed wave 5 is not entirely unambiguous (upper chart). The upward wave sequence cannot be considered impulsive due to fairly strong corrective waves. Therefore, at the moment it is interpreted as a-b-c-d-e. However, if wave 5 becomes extended, then its internal structure will also turn out to be quite complex. If this is indeed the case, the wave structure will transform more than once. One way or another, I expect the EUR/USD pair to resume its upward movement, and the corrective structure a-b-c-d-e already looks quite complete.
The EUR/USD pair declined symbolically by 30 basis points on Friday. Accordingly, the US currency once again enjoyed demand. And it is extremely important to emphasize this point, because the discussion will now turn to the news background. Sometimes it seems that absolutely all movements in the market depend not on events, publications, or news, but on the simple desire or unwillingness of the market to move in a particular direction. Today, buyers were handed all the trumps. It is hard to imagine a more favorable situation for buying European currency. The initial shock associated with the war in Iran had subsided by Wednesday. The wave structure implies the formation of an upward set of waves and indicates the full completion of the downward one. The Nonfarm Payrolls report not only came out worse than market expectations—it turned negative by almost 100 thousand jobs. The unemployment rate increased instead of remaining at 4.3%. What else did buyers need in order to buy?
However, the market currently maintains an absolutely "bearish" sentiment, and this is probably one of those cases when neither the news background nor the wave structure can influence what is happening. My readers can see everything themselves. Even if the current wave structure is incorrect or the downward wave sequence takes on a more complex and extended form, no one can deny that today the news background was entirely in favor of the European currency. However, the market decided to remain in a half-position, when it remains completely unclear whether the downward structure will become more complex or whether the formation of an upward wave sequence will finally begin.
General conclusions.
Based on the analysis of EUR/USD, I conclude that the pair continues to form an upward section of the trend. Donald Trump's policy and the monetary policy of the Federal Reserve remain significant factors behind the long-term decline of the US currency. The targets of the current section of the trend may extend up to the 25th level. At the moment, I believe the pair remains within the framework of global wave 5; therefore, I expect quotes to rise in the first half of 2026. The corrective structure a-b-c-d-e may end at any moment, as it already appears convincing. I believe that it is currently advisable to look for areas and levels for new buy positions with targets around 1.2195 and 1.2367, which correspond to 161.8% and 200.0% Fibonacci levels.
On a smaller scale, the entire upward section of the trend is visible. The wave structure is not the most standard, as the corrective waves have different sizes. For example, the senior wave 2 is smaller than the internal wave 2 within wave 3. However, this also happens. Let me remind you that it is best to identify clear structures on charts rather than necessarily tying analysis to every single wave. At the moment, the upward wave structure raises no doubts.
The main principles of my analysis:
- Wave structures should be simple and clear. Complex structures are difficult to trade and often undergo changes.
- If there is no confidence in what is happening in the market, it is better not to enter it.
- There is never and cannot be one hundred percent certainty about the direction of movement. Do not forget about protective Stop Loss orders.
- Wave analysis can be combined with other types of analysis and trading strategies.
