GBP/USD. Analysis for February 26. Consumer confidence in the US is growing
February 26, 2023 3:22 pm
The wave analysis for the pound/dollar pair now appears to be challenging, but it does not call for any clarifications. The wave patterns for the euro and the pound differ somewhat, but both point to a decrease. Our five-wave upward trend section has the pattern a-b-c-d-e and is most likely already finished. I predict that the downward part of the trend has begun and will continue to develop, taking at least a three-wave form. Wave B appeared to be unnecessarily long, but it did not cancel. So, it is now anticipated that a wave has started to form with a downward trend section, the targets of which are situated below wave a’s low. In other words, at least 100–200 points less than the current rate. Although it’s too soon to speculate, I believe wave c may end up being deeper and that the entire downward part of the trend may potentially adopt a five-wave pattern. It took a long time for the pair to start moving quotes away from the peaks reached, although it had been on the verge of restarting the development of an upward trend segment. Because wave c hasn’t finished yet, the low of assumed wave a hasn’t been broken.
By the conclusion of the week, support for the dollar had emerged.
On Friday, the pound/dollar exchange rate decreased by an additional 70 basis points. On that particular day, there was no background news in the UK, and all of the information was released in the USA in the afternoon. But, demand for the British currency started to decrease early, indicating that the market was already prepared to sell the pound and purchase the dollar once more. Given that the present wave analysis still signals the need to develop a falling wave, in my opinion, the current situation is entirely fair. This leads me to the conclusion that the market does not now place much value on the news context. This week, as well as last week, there weren’t many significant news stories or reports, and the market has responded quite weakly to this background. As a result, the market is currently highly logical, and the variables and movements all make sense.
The consumer sentiment index from the University of Michigan was released on Friday, along with statistics on personal expenses, consumer incomes, and personal spending that exceeded market forecasts. These reports could increase demand for US dollars, but the pair fell earlier than expected, and the news background itself wasn’t compelling enough for the market to wait for it on purpose. I think the market has been actively anticipating ECB and Bank of England rate increases in recent months (as the Fed had previously played off future rate hikes). As a result of the completion of this process and the completion of the upward trend section, the British pound is likely to continue to fall. The market does not appear to be in a rush to get rid of the pound just yet, so there is still much room for a decline.
Conclusions in general
The development of a downward trend section is implied by the wave pattern of the pound/dollar pair. Currently, sales with targets at the level of 1.1508, or 50.0% Fibonacci, might be taken into account. The peaks of waves e and b could be used to place a Stop Loss order. Wave c might be shorter in duration, but for the time being, I anticipate a minimum 200–300 point decline (from current levels).
The image resembles that of the euro/dollar pair at higher wave scales, but there are still minor distinctions. The upward correction part of the trend has now been finished. If this presumption is true, then we must wait for the development of a downward section to continue for at least three waves with the possibility of a decrease in the region of figure 15.
The material has been provided by InstaForex Company – www.instaforex.com
The wave analysis for the pound/dollar pair now appears to be challenging, but it does not call for any clarifications. The wave patterns for the euro and the pound differ somewhat, but both point to a decrease. Our five-wave upward trend section has the pattern a-b-c-d-e and is most likely already finished. I predict that the downward part of the trend has begun and will continue to develop, taking at least a three-wave form. Wave B appeared to be unnecessarily long, but it did not cancel. So, it is now anticipated that a wave has started to form with a downward trend section, the targets of which are situated below wave a’s low. In other words, at least 100–200 points less than the current rate. Although it’s too soon to speculate, I believe wave c may end up being deeper and that the entire downward part of the trend may potentially adopt a five-wave pattern. It took a long time for the pair to start moving quotes away from the peaks reached, although it had been on the verge of restarting the development of an upward trend segment. Because wave c hasn’t finished yet, the low of assumed wave a hasn’t been broken.
By the conclusion of the week, support for the dollar had emerged.
On Friday, the pound/dollar exchange rate decreased by an additional 70 basis points. On that particular day, there was no background news in the UK, and all of the information was released in the USA in the afternoon. But, demand for the British currency started to decrease early, indicating that the market was already prepared to sell the pound and purchase the dollar once more. Given that the present wave analysis still signals the need to develop a falling wave, in my opinion, the current situation is entirely fair. This leads me to the conclusion that the market does not now place much value on the news context. This week, as well as last week, there weren’t many significant news stories or reports, and the market has responded quite weakly to this background. As a result, the market is currently highly logical, and the variables and movements all make sense.
The consumer sentiment index from the University of Michigan was released on Friday, along with statistics on personal expenses, consumer incomes, and personal spending that exceeded market forecasts. These reports could increase demand for US dollars, but the pair fell earlier than expected, and the news background itself wasn’t compelling enough for the market to wait for it on purpose. I think the market has been actively anticipating ECB and Bank of England rate increases in recent months (as the Fed had previously played off future rate hikes). As a result of the completion of this process and the completion of the upward trend section, the British pound is likely to continue to fall. The market does not appear to be in a rush to get rid of the pound just yet, so there is still much room for a decline.
Conclusions in general
The development of a downward trend section is implied by the wave pattern of the pound/dollar pair. Currently, sales with targets at the level of 1.1508, or 50.0% Fibonacci, might be taken into account. The peaks of waves e and b could be used to place a Stop Loss order. Wave c might be shorter in duration, but for the time being, I anticipate a minimum 200–300 point decline (from current levels).
The image resembles that of the euro/dollar pair at higher wave scales, but there are still minor distinctions. The upward correction part of the trend has now been finished. If this presumption is true, then we must wait for the development of a downward section to continue for at least three waves with the possibility of a decrease in the region of figure 15.
The material has been provided by InstaForex Company – www.instaforex.com
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