06.06.202416:53 Forex Analysis & Reviews: Analysis of GBP/USD pair on June 6th. The dollar approaches another critical level

The wave pattern for the GBP/USD pair remains quite complex. In April, a successful attempt to break through the 50.0% Fibonacci level indicated the market's readiness to form a downward wave 3 or c. If this wave continues to develop, the wave pattern will become much simpler, eliminating the threat of further complications. However, the pair has remained strong recently, casting doubt on the market's readiness to sell.

In the current situation, my readers can still anticipate wave 3 or c formation, targeting levels below the low of wave 1 or a, at 1.2035. Thus, the pound should decrease by at least 600-700 basis points from the current levels. If this decline occurs, wave 3 or c will be relatively small, so I expect a much larger drop in quotes. Constructing the entire wave 3 or c could take a long time. Wave 2 or b took 5 months to form, and it was just a corrective wave. Forming an impulse wave might take even longer. The last corrective wave has been very prolonged and has not been completed, threatening the entire wave pattern.

Demand for the Pound Remains Steadily High

The GBP/USD rate remained almost unchanged throughout Thursday. The news background for the pound and the dollar was quite weak today. In the UK, the final assessment of the Construction PMI for May was released in the morning, which recorded an increase to 54.7 points, compared to market expectations of 52.5 points. Demand for the pound did not increase, as this is not the most crucial report for the market. A few hours ago, the US released a report on the change in the number of jobless claims. It showed a value of 229 thousand, slightly higher than market expectations. Today, demand for the pair might have increased slightly, but buyers seem exhausted. The pound has been rising continuously for over six weeks, and the news background does not always justify such movement.

Tomorrow marks the final note of this very interesting week. We have seen that most US economic indicators continue to decline, and those that don't are not significantly helping the US dollar. The current wave pattern still suggests the formation of a new downward wave. At present, the pair has approached the 23.6% Fibonacci level. A failed attempt to break through this level could give the US dollar another chance. Only a miracle could save the dollar if this level also fails to hold off buyers.

General Conclusions

The wave pattern for the GBP/USD pair still suggests a decline. I am still considering selling the pair with targets below 1.2039, as wave 3 or c has yet to be canceled. As the pair attempts to reverse around 1.2822 and near the peak of the supposed wave 2 or b, sales can be considered with initial targets around 1.2315. However, be very cautious, as the market is very reluctant and rarely increases demand for the US dollar.

On the larger wave scale, the wave pattern is even more indicative. The downward corrective section of the trend continues to form, and its second wave has become extended—at 76.4% of the first wave. A failed attempt to break through this level could lead to the beginning of wave 3 or c, but a corrective wave is currently forming.

Key Principles of My Analysis:

1. Wave structures should be simple and understandable. Complex structures are difficult to trade and often change.
2. If there is no certainty about the market, it is better to stay out of it.
3. There is never 100% certainty in the direction of movement. Always use protective orders like Stop Loss.
4. Wave analysis can be combined with other types of analysis and trading strategies.