The wave pattern on the 4-hour chart for EUR/USD has changed in appearance. There is still no discussion of canceling the upward trend segment (shown on the lower chart), which began in January of last year, but the trend structure now looks highly ambiguous. In such situations, I always recommend switching to a lower timeframe (upper chart) and analyzing the simplest and smallest wave structures to make short-term forecasts, which are sufficient for opening trades.
Wave structures can become very complex and allow for many possible scenarios. The easiest approach is to trade standard "five-three" formations.
On the chart above, I can identify a classic five-wave impulsive structure with an extended third wave. After the completion of this structure, the market began forming a corrective pattern consisting of at least three waves. We have already seen three waves, so in the near future the market is likely to focus on forming at least one corrective downward wave. Further developments will depend on geopolitics: either the upward structure becomes more complex, or a new downward trend segment begins.
The EUR/USD pair rose by 20 basis points during Thursday's session, while price volatility once again nearly disappeared. No important reports or news were released during the day, so market participants' apathy is understandable. The market is once again in waiting mode.
Traders are waiting for developments in the Middle East, labor market data, the arrival of Kevin Warsh, or a new escalation in the trade conflict between the European Union and the United States. As we can see, there are many topics to discuss, but I prefer to focus on the most relevant ones at the moment. Right now, there are two key themes.
After an extremely positive Wednesday, when many media outlets and "insiders" almost convinced the market that Tehran and Washington were ready to sign some form of memorandum, Thursday arrived without any confirmation of the story.
Let me remind you that, according to more independent economists and analysts — those who do not base conclusions solely on anonymous insider information — the issue of Iran's nuclear energy program remains the most difficult topic, and the parties are still far from reaching a consensus. Therefore, the deal could collapse at any moment, just as meetings between U.S. and Iranian delegations have repeatedly fallen apart in the past.
This topic remains unmatched in importance. Even if the market's current attention is focused on geopolitics, the Nonfarm Payrolls report and unemployment rate are always important. And over the past year, they have also been consistently unpredictable.
Let me remind you that throughout all of 2025, only about 200,000 jobs were created in the United States, while the Bureau of Labor Statistics has continuously revised previous reports downward. The beginning of the new year looked more positive, but uneven. April's payrolls figure should help determine the trend that has been forming this year.
Overall Conclusions
Based on my EUR/USD analysis, I conclude that the instrument remains within an upward trend segment (lower chart), while in the short term it remains within a corrective structure. The corrective wave sequence appears largely complete and could only become more complex and prolonged if the geopolitical situation in the Middle East continues to improve.
Otherwise, a new downward trend segment could begin from current levels. We have already seen the corrective wave, and I expect a new upward movement from current levels with targets near the 1.1900 level.
On the lower timeframe, the entire upward trend segment is visible. The wave structure is not entirely standard, since corrective waves differ in size. For example, the larger wave 2 is smaller than the internal wave 2 within wave 3. However, this can happen as well.
Let me remind you that it is best to focus on clear and understandable structures on the chart rather than trying to label every single wave. The latest waves are difficult to identify precisely, so my analysis relies more heavily on the higher timeframe.
Key Principles of My Analysis
- Wave structures should be simple and understandable. Complex structures are difficult to trade and often change unexpectedly.
- If there is no confidence in market conditions, it is better to stay out of the market.
- Absolute certainty regarding market direction never exists. Always remember to use Stop Loss protection orders.
- Wave analysis can be combined with other forms of analysis and trading strategies.
