The wave counting for the Pound/Dollar instrument has cleared up a little thanks to yesterday's drop in quotes. Now we can say with more confidence that the supposed wave e has completed its construction. Consequently, the entire upward part of the a - b - c - d - e trend has ended. If this is really the case, then the construction of a new downward trend has begun, which can also turn out to be three-wave. At the moment, presumably, the construction of its first wave a continues, the targets of which are located near the 23.6% Fibonacci level. Let me draw the readers' attention to the fact that starting from February 24, the instrument is moved only by corrective structures, which makes it somewhat difficult to work with. Let me remind you that wave counting should be, first of all, not accurate, but such that it can be worked out and earned on. If we see complex corrective structures, then it is more difficult to work with them than with impulse ones.
The Pound/Dollar instrument lost about 130 basis points on Thursday plus another 40. Thus, for now, I can conclude that the decline in pound quotes is solely a reaction of the markets to the results of the Fed meeting. If so, then the decline in quotes may not continue further. Wave a already looks quite complete, given the size of all the corrective waves of the previous two trend sections. Thus, in the near future, we can expect the construction of an upward wave b. I also want to note that the sterling may have already exhausted the potential for its fall. There has been some positive news from the UK lately. The deadline for lifting quarantine measures was extended until July 19, there is an increase in cases of the Indian strain of coronavirus in the country, and it is not yet clear how fast the economy is recovering since there is still no data for the second quarter on GDP. Thus, the pound sterling suffered for a long time near the 0.0% Fibonacci level, but still began to move away from the highs reached. Now it's the Bank of England's turn, as the ECB and Fed meetings have already taken place. The most important question ahead of the meeting of the British regulator is how it is going to act in the coming months. Let me remind you that the Fed did not give a single sign that the parameters of monetary policy will be changed in the near future, and still the demand for the dollar has grown. If the Bank of England also vaguely hints that it is ready to discuss tapering the quantitative stimulus program, this may support the British currency.
At this time, the wave pattern has cleared up a bit. However, the supposed wave b may already be nearing its completion. An unsuccessful attempt to break through the 23.6% Fibonacci level may confirm that the markets are ready to buy the pound. Earlier I recommended trading from the level of 1.4240. As you can see, this strategy turned out to be a winning one, since the quotes of the instrument moved away from it by 260 basis points. In the near future, I recommend looking for buy signals and waiting for the completion of the expected wave a.
The upward trend, which began its construction a couple of months ago, is taking on a rather ambiguous form. As I said above, several wave counting options are possible at once. At the moment, this part of the trend looks complete. Then the construction of a new, at least three-wave, downward trend section began. Thus, we can expect a decline in quotes in the future to the lows of waves c and b.
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