For the pound/dollar instrument, the wave marking looks quite complicated at the moment but still does not require any clarification. The upward wave, built between May 13 and May 27, does not fit into the overall wave picture, but it can still be considered corrective as part of the downward trend section. Thus, it can be concluded that the downward section of the trend continues its construction. We have completed waves a, b, c and d, so we can assume that the instrument is inside wave e. Within this wave, waves of a lower scale are being viewed, and I can assume that the last increase in quotations is wave 4 in e. If this is true, the quote decline continues within wave 5 in e, which may be completed soon. The wave markings of the euro and the pound in the last waves do not coincide, but there is nothing wrong with that. We have just gotten used to the fact that both instruments move almost the same. There are some differences, but both downward trend sections can still be completed in the near future. Wave e may have targets near the 1.1112 level, corresponding to 200.0% Fibonacci.
The Fed should raise the rate by no more than 75 points to save the pound.
The exchange rate of the pound/dollar instrument decreased by 50 basis points on September 20 and today – by another 40. The decline in demand for the pound sterling is observed almost every day, although I remind you that today and tomorrow, the results of the Fed and Bank of England meetings will be announced, and the market could wait for them first. But it shows that the results of these meetings are either unimportant or will not affect anything. Thus, the British pound may decrease by another 200-300 points. Still, what should one expect from the market tonight? From my point of view, today, the market will have a great opportunity to complete the construction of a downward section of the trend, which has been very much delayed. By reducing demand for the pound in the last few weeks, I believe that the market has already more than worked out both the Fed rate hike and the Bank of England rate hike. Therefore, tonight we can see an increase in the number of instruments. But how long and strong it will be is still difficult to say.
The reason lies in the geopolitical situation, which has sharply escalated today. Partial mobilization has been announced in Russia. Thus, the Ukrainian-Russian conflict may intensify in the coming weeks or months. With this conflict, the demand for the euro and the pound fell at the beginning of the year, so now, if it escalates, the market will have additional motivation to sell these currencies. And wave markings may once again become more complicated due to the news background factor. Now we see the case when the waves say "up", and the news background says "down." Both types of analysis cannot be right simultaneously, so someone will lose.
General conclusions.
The wave pattern of the pound/dollar instrument suggests a continued decline in demand for the pound. I advise now selling the instrument with targets near the estimated mark of 1.1112, equivalent to 200.0% Fibonacci, for each MACD signal "down." Inside the fifth wave, it is necessary to sell more cautiously since the downward section of the trend can end at any moment. Today and tomorrow, the news background will be very strong, complex, and strong movements that do not correspond to the wave pattern are possible.
The picture is very similar to the Euro/Dollar instrument at the higher wave scale. The same ascending wave does not fit the current wave pattern, the same five waves down after it. Thus, one thing is unambiguous – the downward section of the trend continues its construction and can turn out to be almost any length.
