The wave count on the 4-hour EUR/USD chart has become more complex. On the higher timeframe (bottom chart), the downward trend segment has taken the form of a five-wave A-B-C-D-E structure, which could be completed at any moment, as it appears to be fully developed. All the waves in this segment are approximately the same size, so this structure is considered corrective. If this assumption is correct, a new upward impulsive trend segment will begin after its completion, with targets well above the 1.2000 level.

On the lower timeframe (top chart), an impulsive wave sequence is still developing, which may belong to wave E of the higher timeframe. If this is indeed the case, the dollar's strengthening is nearing its end, regardless of how much further it rises. The expected wave 5 of E has either been completed or is close to completion. In either case, the current wave structure suggests that the downward wave sequence is nearing completion on both charts. News developments and a sharp shift in market sentiment have led to a strong rally in the US dollar, but few new reasons for further dollar strength remain.

The Elections Have Begun; the Dollar Remains Stable.

The EUR/USD exchange rate rose by 30 points on Monday, although it had every chance of ending the day up 60–70 points. However, the US ISM manufacturing PMI was released yesterday, curbing the upward momentum. In October, the index rose to 55.5 points, while market participants had expected an increase to just 54.6. Thus, the ISM index came in significantly higher than expected, allowing the dollar to recover most of its intraday losses. Today, the US JOLTS report on job openings for September will be released, but the market has already shifted its attention to the US congressional elections.

According to preliminary data, 55 million Americans have already voted. Most of them are registered Democrats, so take a guess who Democratic voters cast their ballots for. As noted yesterday, turnout in these midterm elections could reach record levels not seen in several decades, and there is only one reason for this: more and more Americans are realizing that unless Donald Trump is stopped, the country's economic situation will deteriorate further. Trump's policies have led to an unprecedented rise in energy prices worldwide, as well as accelerating inflation, which hits lower-income households particularly hard because they are sensitive even to small price increases. Recent opinion polls have shown that most Americans have begun cutting back on essential goods and food to afford fuel.

Therefore, high voter turnout is not surprising. Most Americans are seeking to vote for Democrats to establish a counterbalance to Trump's policies. As noted earlier, US policy is unlikely to change fundamentally even if the Democrats win control of both chambers of Congress. Nevertheless, this would be preferable to leaving the president with unchecked power.

General Conclusions

Based on the EUR/USD analysis, the pair remains within a global corrective trend structure labeled A-B-C-D-E. However, this structure appears fully developed and may therefore be complete. At present, conditions appear favorable not only for buying the euro but also for anticipating a full-fledged upward trend segment. According to the higher timeframe, the pair is expected to rise by at least to the 1.1700–1.1800 level. The failed attempt to break above 1.1126, corresponding to the 50.0% Fibonacci level (bottom chart, higher timeframe), also indicates that the market may be ready to move higher.

On the higher timeframe, the downward trend segment is visible in the form of an A-B-C-D-E structure. The internal wave structure of wave E has taken the form of a five-wave impulse, but it may already be complete. If this assumption is correct, a new upward trend segment will begin.

Key Principles of the Analysis

1. Wave structures should be simple and easy to understand. Complex structures are difficult to trade and often involve changes in the expected market direction.
2. If there is uncertainty about market conditions, it is better to stay out of the market.
3. There can never be absolute certainty about the direction of price movements. Do not forget to use Stop Loss orders.
4. Wave analysis can be combined with other forms of analysis and trading strategies.