New Developments and Revised Scenarios for Summer 2024

6月30日

Last week, I highlighted a potential best-buy zone for EUR/USD with two possible scenarios. The market movements this week will be crucial in determining which scenario will unfold for July, August, and September.

However, an update is warranted as the price movements in the last week of June did not align with either scenario:
Scenario I: This was invalidated because the price did not make a strong enough upward impulse to signal the start of a trending movement.
Scenario II: This was also invalidated because, although the price did move sideways in the support area, it did not close near 1.065-1.064.

Given these developments, I propose a new potential scenario (Scenario III):
I maintain the view that the price is moving within a wave 4 pattern, most likely forming a triangle (ABCDE):
Wave A: Completed (July 2023 - October 2023).
Wave B: Should form a motive wave (abc).
- Wave (a) is completed (October 2023 - November 2023).
- Currently, wave (b) is in progress, where the price made a fake breakout upwards but returned to its trendline channel.
Given the complexity of the price movements, wave b will likely take the form of a double three (wxy) pattern.

We may need to be patient as the price is likely to remain complex within wave y before making a significant upward move (wave C).
However, if our assumption of a wxy pattern is correct, the price will touch 1.0575 before rising (SMC traders would see an order block in that area).

This outlook aligns with the fundamental context:
the euro is expected to weaken due to interest rate cuts,
while USD is likely to avoid significant movements ahead of the presidential election.

Advisory Note:
Following a trend strategy may not be suitable in this environment.
Instead, it is advisable to adopt a "sell on high and buy on dip" approach while paying close attention to supply and demand zones.

Good luck!

Disclaimer
Please note that this analysis is based on technical indicators and should not be considered financial advice. Conduct your own research and consult with a financial advisor before making any trading decisions.