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The wave analysis for the GBP/USD pair remains quite complex. For several months now, we have been observing movements between the Fibonacci levels of 50.0% and 23.6%. Horizontal movement is not the best for wave analysis. As I have already noted, the wave pattern should be simple and understandable to work with. Currently, there needs to be more simplicity and understanding. If the presumed wave 2 or b is indeed completed, then the construction of the expected wave 3 or c has begun. However, there are many doubts about this scenario because there is currently another sideways movement in the market.
Moreover, only the British pound is in a sideways trend. The euro, which usually trades similarly 80% of the time, is in the process of forming a downward trend segment. From this fact alone, we can understand that something is wrong with the British pound. If this is visible to the naked eye, trading the British pound is associated with increased risks. In the current situation, my readers can only hope for the construction of wave 3 or c, the targets of which are located below the low of wave 1 or a. Therefore, the British pound should decline by at least another 600 basis points.
The British pound started to retreat from the 25th figure.
The GBP/USD pair rate increased by 25 basis points on Tuesday and remained unchanged today. This is quite strange behavior for the market if you have just opened the chart of the currency pair movement. Yesterday, the JOLTS report clearly favored the dollar. Today, the ADP report showed 184 thousand new non-farm jobs instead of the 148 thousand expected by the market. Two US labor market reports turned out to be higher than market expectations, which should have increased market participants' demand for the dollar.
However, the GBP/USD pair has been trading sideways for several months in a row. The approach of the low of wave B in 2 or b again discouraged sellers, and the American currency once again failed to realize its potential. Unfortunately, a new upward wave may now begin, which will not correspond to the current news background. For example, this could be wave E in 2 or b. If the American data for the remaining two days of the week does not show high values, analysts will be able to say, "The rise of the British pound is justified." If, however, American data turns out to be stronger than expected and the dollar fails to continue strengthening against the British pound, then we have already seen a similar picture on Tuesday and Wednesday. The sideways trend for the British pound remains intact, and the wave structure may be complicated several more times before it is finally completed.
General conclusions.
The wave pattern of the GBP/USD pair still suggests a decline. At the moment, I am still considering selling the pair with targets below the 1.2039 mark, as wave 3 or c will sooner or later develop. However, as long as wave 2 or b is not completed with one hundred percent certainty, an increase in the pair can be expected up to the 1.3140 mark, which corresponds to 100.0% according to Fibonacci. The deviation of quotes from the recent peaks still needs to be larger to be confident at the beginning of the construction of wave 3 or c.
On a larger wave scale, the wave pattern is even more eloquent. The downward correctional segment of the trend continues its construction, and its second wave has acquired an extended form - up to 76.4% of the first wave. An unsuccessful attempt to break through this level could lead to the beginning of the construction of 3 or c. the beginning of the construction of 3 or c.
The main principles of my analysis are:
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