The wave pattern on the 4-hour chart for EUR/USD has changed. There is still no indication of a cancellation of the upward trend segment (lower chart), which began in January of last year, but the overall wave structure now appears highly ambiguous. In such situations, I always recommend switching to a lower timeframe (upper chart) and focusing on the simplest and smallest wave structures to make short-term forecasts, which is sufficient for opening trades. Wave structures can be very complex and allow for multiple scenarios. The simplest approach is to trade standard "five-three" patterns.

In the chart above, a classic five-wave impulse structure with an extended third wave can be identified. If this is correct, then this structure has been completed, and a corrective phase of at least three waves should follow. Therefore, in the near term, an increase in quotes can be expected, but only as part of a correction relative to the latest trend segment. At the moment, recent wave structures do not fit well into the higher-level count, but this should become clearer over time. In the near future, the euro may recover toward the 1.1666 and 1.1745 levels.

The EUR/USD pair declined by 30 basis points on Wednesday, which did not affect the wave structure. The news background was relatively weak, with the most important event being the UK inflation report, which did not surprise market participants. As a result, GBP/USD also showed little change during the day and did not influence EUR/USD as it might have.

Interesting developments are unfolding around the conflict between Iran and the United States. A few weeks ago, many analysts believed that Trump would carry out strikes on Iran, similar to last summer, and that would be the end of it. Now, however, the world is preparing for a prolonged conflict in the Middle East. Washington had expected that after a series of infrastructure-damaging strikes, Tehran would concede and accept Trump's terms. In reality, after three weeks, Trump himself does not yet have a clear path to reaching a ceasefire with Iran.

Today, reports emerged that Washington sent Iran a draft agreement consisting of 15 points. Shortly afterward, Iran rejected the proposal for negotiations for the second time this week. Meanwhile, Israel intends to continue strikes on Iran regardless of any negotiations between the US and Iran, and Washington has begun deploying ground forces to the region. It remains unclear whether the conflict is moving toward negotiations and resolution or toward further escalation. The situation in the Middle East remains uncertain, which is why the market is not rushing into trading decisions. What we are seeing now is the formation of a corrective wave structure, as current conditions are suitable for a correction: there is neither escalation nor de-escalation. However, a correction cannot last indefinitely, and Donald Trump will not simply abandon the issue of Iran.

General conclusions

Based on the EUR/USD analysis, I conclude that the pair remains within an upward trend segment (lower chart) and has completed a downward wave sequence in the short term. Since the five-wave impulse structure has been completed, over the next one to two weeks a rise in quotes can be expected, with targets around 1.1666 and 1.1745, corresponding to 38.2% and 50.0% Fibonacci levels. Further price movement will depend entirely on developments in the Middle East.

On the lower timeframe, the entire upward trend segment is visible. The wave structure is not entirely typical, as corrective waves vary in size. For example, the higher-degree wave 2 is smaller than the internal wave 2 within wave 3. However, such situations do occur. It is better to focus on clear and understandable structures rather than strictly adhering to every wave. The trend may reverse in the near future.

Key principles of my analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often change.
2. If there is no confidence in market conditions, it is better to stay out.
3. Absolute certainty about market direction is impossible. Always use Stop Loss orders.
4. Wave analysis can be combined with other analytical methods and trading strategies.