The wave counting for the Pound/Dollar instrument looks as close as possible to the wave counting of the Euro/Dollar instrument. It can be assumed that all recent movements of both instruments were formed based on the same news background and factors. That is why we are now observing a three-wave set of waves for the Pound/Dollar, which could have already completed because since Friday the instrument has moved away from its lows by 120 basis points. Thus, the supposed wave c may already be completed, and wave a, as in the case of the Euro/Dollar instrument, turned out to be very extended and practically unreadable if we talk about its internal structure. Proceeding from this, according to the British pound, I also now expect a new upward set of waves to be built, possibly again a three-wave. Wave c can take on a more complex and extended form, but now I consider this option as a backup.
The Pound/Dollar instrument gained about 70 basis points during Friday. The news background that day was very interesting and it was expressed in reports on unemployment and the number of new jobs outside the US agricultural sector. Also on this day, reports were released on the trade balance and changes in average earnings in the United States. However, Nonfarm Payrolls ranked first in importance and did not disappoint the markets. The report did not disappoint, but the markets were still disappointed and began to reduce demand for the US dollar. It was thanks to this reaction that the instrument began to move away from the reached lows, which now allows us to expect the construction of a new upward trend section. I believe that the chances for a new increase in the pound quotes are now really high. The markets have already played the meetings of the Fed and the Bank of England, the instrument has not even managed to fall to the lows of waves c and b.
Thus, the British currency has excellent chances to resume the upward trend after a four-month pause. The news background from the UK is not the most interesting right now. The country continues to develop the fourth wave of the coronavirus pandemic, even though more than 60% of the adult population received both doses of the vaccine. However, the number of cases continues to grow and is already 24,000-28,000 per day. If we take into account the economic news background, then a rather important report on GDP was released last week, to which the markets did not pay any attention. Great Britain continues to be in very tense relations with the European Union, negotiations on the Northern Ireland protocol continue. Today, the PMI index for the services sector was released in the UK, which was higher than market expectations and amounted to 62.4 points. However, the activity of the markets today was minimal, and the amplitude of the movement was no more than 20 points.
At this time, the wave pattern has become a little clearer. The assumed waves a and b are completed, but wave c can also already be completed. Given the high degree of similarity with the Euro/Dollar instrument, we can expect an increase in quotes, but the pound did not make an unsuccessful attempt to break through an important level. Thus, I recommend buying the pair with targets located above wave b but do it very carefully and constantly pay attention to the euro.
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 difficult, as there is no impulse movement now. At this time, presumably, the construction of the downward part of the trend continues, so we can expect a decline in quotes in the future to the lows of waves c and b. At the same time, wave c could be shortened and already completed.
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