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 started and will continue to develop, taking at least a three-wave form. Although Wave B appeared to be unnecessarily prolonged, it did not cancel. Consequently, it is presumed that the development of a wave from the downward trend section, with targets situated below wave a’s low, is continuing at this time. The price would be at least 300–400 points less than it is at the moment. 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. For a very long time, the pair has been on the verge of starting up again with the development of an upward trend section. Since the assumed low of wave a has not yet been breached, wave c has not yet finished and does not take on a sufficiently extended form.
On Tuesday, the exchange rate of the pound/dollar pair decreased by 50 basis points, and it will now seek to break through the level of 23.6% once more. This might be the fifth attempt in a row, and I believe that sooner or later the 1.1940 mark will fall, and the pair’s drop within the framework of the projected wave c will continue, as it should. A breakthrough could occur today (or this week). Before Jerome Powell’s first speech (the second will be tomorrow) and after the week – UK GDP, nonfarm payrolls, unemployment – demand for the British is declining once again. These four studies have the potential to shock the market. Of course, American data may turn out to be lower than market forecasts, causing demand for the US currency to fall, but you must admit that the possibility of dollar growth is also high based on these numbers.
Jerome Powell will address Congress today, as I’ve already mentioned, but based on the rise in the dollar, it appears that the market has already anticipated “hawkish” language in this speech. If he doesn’t get it, the pair might already be rising in the evening. Powell’s address tomorrow will be a carbon copy of this one. Thus, I would suggest that today there is a small probability of a breakout of the 1.1940 level given the pair’s current drop. There are no issues with the length of wave c, therefore market participants can merely wait in such a scenario. Perhaps you might trade during the day, which is not the best strategy for wave analysis. The higher timeframes are where waves should be used, not the lower ones. In terms of the Bank of England and its potential rescue of the British pound, I would not put too much faith in this option right now. The wave pattern now takes precedence over the news context.
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 300–400 point decline (from current levels).
The image resembles that of the euro/dollar pair at higher wave scales, but there are still minor differences. 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 started and will continue to develop, taking at least a three-wave form. Although Wave B appeared to be unnecessarily prolonged, it did not cancel. Consequently, it is presumed that the development of a wave from the downward trend section, with targets situated below wave a’s low, is continuing at this time. The price would be at least 300–400 points less than it is at the moment. 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. For a very long time, the pair has been on the verge of starting up again with the development of an upward trend section. Since the assumed low of wave a has not yet been breached, wave c has not yet finished and does not take on a sufficiently extended form.
On Tuesday, the exchange rate of the pound/dollar pair decreased by 50 basis points, and it will now seek to break through the level of 23.6% once more. This might be the fifth attempt in a row, and I believe that sooner or later the 1.1940 mark will fall, and the pair’s drop within the framework of the projected wave c will continue, as it should. A breakthrough could occur today (or this week). Before Jerome Powell’s first speech (the second will be tomorrow) and after the week – UK GDP, nonfarm payrolls, unemployment – demand for the British is declining once again. These four studies have the potential to shock the market. Of course, American data may turn out to be lower than market forecasts, causing demand for the US currency to fall, but you must admit that the possibility of dollar growth is also high based on these numbers.
Jerome Powell will address Congress today, as I’ve already mentioned, but based on the rise in the dollar, it appears that the market has already anticipated “hawkish” language in this speech. If he doesn’t get it, the pair might already be rising in the evening. Powell’s address tomorrow will be a carbon copy of this one. Thus, I would suggest that today there is a small probability of a breakout of the 1.1940 level given the pair’s current drop. There are no issues with the length of wave c, therefore market participants can merely wait in such a scenario. Perhaps you might trade during the day, which is not the best strategy for wave analysis. The higher timeframes are where waves should be used, not the lower ones. In terms of the Bank of England and its potential rescue of the British pound, I would not put too much faith in this option right now. The wave pattern now takes precedence over the news context.
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 300–400 point decline (from current levels).
The image resembles that of the euro/dollar pair at higher wave scales, but there are still minor differences. 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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