The wave counting for the Pound/Dollar instrument looks quite clear at this time. The construction of the upward correction of the trend a - b - c - d - e is completed. Thus, at this time, the construction of the downward trend section has begun, which also takes on a three-wave form. If this assumption is correct, then waves a and b have already ended at this time, therefore, the construction of wave c has begun and continues. If this is true, then the decline in quotes will continue with targets located near the estimated level of 1.3640, which equates to 38.2% Fibonacci. At the same time, the sections of the trend between February 23 and June 1 showed that the structures at this time are quite complex, and corrective waves can reach 70-90 percent of the size of the impulse (in fact, also corrective) waves. Therefore, the structure of the descending part of the trend, which is being built at a given time, can also be quite complex and five-wave. You need to be ready for this.
The Pound/Dollar instrument lost about 50 basis points during Monday and Tuesday. Not much, but this is enough to count the wave c continuing its construction. Yesterday, the representative of the Bank of England, Andy Haldane, made a speech, who, let me remind you, was the only one during the last two meetings who voted for reducing the economic stimulus program. Thus, Haldane can be considered the only supporter of monetary tightening in MPC. However, his speech had no impact on the Pound/Dollar instrument. Haldane again gave a speech today, but with the same result. In addition, the UK released the house price index, changes in the volume of the M4 money supply, as well as data on loans and mortgages. However, all these reports are considered weak and quite predictably did not have any impact on the instrument either. Thus, for the most part, the instrument is now declining based on the wave counting. And the news background either supports it or opposes it.
So far, there have been no reports that would support the demand for the pound sterling, so nothing prevents it from declining and the dollar from growing. Tomorrow, Andy Haldane will deliver a third speech this week, and the GDP report will be released in the UK. Although, most likely, the markets will pay more attention to the change in the number of people employed by ADP in the US. Let me remind you that this report reflects the state of the labor market in the United States, and the Fed now considers the restoration of the labor market as its priority goal. Therefore, it depends very much on how strong the report turns out to be, whether the Pound/Dollar instrument will continue to decline.
At this time, the wave pattern has cleared up a bit. The supposed waves a and b are complete. Therefore, the wave is still being built with the target which can be located at 100-150 points below the current levels. I recommend selling the instrument for each MACD signal with targets located near the calculated level of 1.3640.
The upward part of the trend, which began its construction a couple of months ago, has taken on a rather ambiguous form and has already been completed. However, the wave counting still looks rather complicated, as there is no impulse movement now. Presumably, the construction of a new, at least three wave downward trend has begun. Thus, we can soon expect a decline in quotes to the lows of waves c and b.
The material has been provided by InstaForex Company - www.instaforex.com