For the pound/dollar instrument, the wave marking looks quite complicated at the moment but still does not require any clarification. We have a supposedly completed downward trend segment consisting of five waves a-b-c-d-e. If this is indeed the case, then the construction of a new upward trend section has begun. Its first and second waves are presumably completed. Unfortunately, there is no confidence in this particular scenario since the instrument must go beyond the peak of the last wave to show us its readiness to build an upward section of the trend and not complicate the downward one once again. The peak of the nearest wave d is located at about 23 figures. Thus, even after the pound has increased by 1000 points, you need to go up another 1000 points to reach this peak. I also want to note that the wave markings of the euro and the pound are different now. If the construction of an upward trend has begun, then the wave marking for the euro should also be transformed into an upward one. So far, the wave marking for the British looks a little more convincing, but it can easily transform into a downward one.
The news background is starting to be just a background for the market.
The exchange rate of the pound/dollar instrument increased by 20 basis points on October 20. The instrument's amplitude is minimal today due to the absence of news background. Or, "and the lack of a news background too." Usually, wave marking allows you to answer the question, where can we expect movement in the near future? Now, from the current positions, the instrument can continue to decline or resume growth. This is because the downward trend section has become more complicated many times, and it can do it more than once. Thus, we are deprived of the classical wave structure, which in most cases, allows us to predict the movement.
The news background of recent weeks (not concerning tax changes in the UK and the purchase of bonds by the Bank of England) is beginning to become just that: background. Important geopolitical news has been coming in abundance since the beginning of the year. The market cannot ignore them. At the beginning of the year, there was a lot of panic due to the start of monetary policy tightening programs by the ECB, the Fed, and the Bank of England. However, in the last few months, the market seems to have already tired of the constant news about a new rate hike by one or more regulators, from new reports of high inflation or the threat of recession. Inflation is high in the US, the EU, and Britain. The recession will begin in the US, the EU, and the UK. The world economy's three "whales" are now in approximately the same conditions. Somewhere a little better, somewhere a little worse. And such conditions led to the constant growth of demand for American currency in 2022. If there are no drastic changes in the news background, such a picture in the foreign exchange market may continue.
General conclusions
The wave pattern of the pound/dollar instrument implies the construction of a new upward trend segment. Thus, now I advise buying a tool for MACD reversals "up" with targets located above the peak of wave 1. Both buyers and sellers should be careful since it is unclear which wave markings (euro or pound) will require adjustments, and the news background may negatively affect the future of the euro and pound. The decline within the corrective wave 2 may already have been completed.
The picture is 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. The downward section of the trend can turn out to be almost any length, but it may already be completed.
