Wave pattern

The wave counting for the Pound/Dollar instrument continues to look quite difficult due to deep corrective waves as part of the downward trend section, but at the same time, it is quite convincing. Inside the last wave C, presumably five internal waves are visible, and each subsequent one is approximately equal in size to the previous one. A successful attempt to break through the low of the proposed wave c indicates the five-wave appearance of the last wave C.

However, as I have already said, all waves in the composition of C or A are almost equal in size. Thus, the minimum entry below the low of wave c in C may already mean that wave e is nearing its completion and may even fail to fall to the 61.8% Fibonacci level. Thus, to complete not only e but also the entire wave C, you need to be ready.

So far, I am not considering the option of complicating the proposed wave C. The internal wave counting of the wave e in C does not look clear and, therefore, can take any form of complexity. The departure of quotes from the reached lows may already mean the end of wave e, but at the same time, an unsuccessful attempt to break through the 50.0% Fibonacci level may lead to a complication of this wave.

Pound counts on wave counting but rises with great difficulty

The exchange rate of the Pound/Dollar instrument did not show any changes on Monday. On Tuesday, the quotes of the instrument first jumped by 60 basis points and then decreased by the same amount. Thus, in the first two days of the new week, the changes were minimal, and the amplitude was low. But there was a fairly strong news background in the UK and the U.S.

UK's unemployment report was released today, which showed a decrease of 0.2%, applications for unemployment benefits (-14.9 K), and a change in the average level of earnings (+5.8%). All three reports were either better than the expectations of the markets or were "at the level."

Thanks to these data, the demand for the pound increased today in the first half of the day, but in the second half, no less strong statistics came from the U.S. Retail sales volumes in October increased by 1.7% on a monthly basis, although the markets expected no more than 1.3%, and industrial production volumes - by 1.6% MoM with expectations of +0.9%.

Thus, in the second half of the day, the markets were already increasing demand for the US currency, which led to a decrease in the quotes of the instrument. There were no more interesting news and reports today, but that was quite enough.

General conclusions

The wave pattern of the Pound/Dollar instrument looks quite convincing now. The expected wave e may be nearing its completion, and the MACD indicator has formed an "up" signal. Therefore, if the attempt to break through the 1.3460 mark remains unsuccessful, then the next "down" signal can still be considered for sales with targets located near the 1.3270 level, which equates to 61.8% Fibonacci. A successful attempt to break through the 50.0% Fibonacci level will indicate the readiness of the markets to build a new upward trend.

Starting from January 6, the construction of a new downward trend section began, which can turn out to be almost any size and any length. At this time, the proposed wave C may be nearing its completion, but there is no confirmation of this yet. The entire downward section of the trend may lengthen, but there are no signals about this yet either.