For the pound/dollar pair, the wave analysis remains relatively simple and clear. The bullish wave 3 or c construction has finished, and a presumably new bearish trend segment has begun, which could still be wave d. I think the pound has no reason to resume the rise (and many reports and events confirm my opinion). However, the wave pattern has transformed into a more complex one, and wave 3 or c has taken on a more extended form than many analysts expected several months ago. The entire bullish segment of the trend may still take on a five-wave form if the market finds new reasons for long-term purchases.
In any case, I expect the continuation of the downward wave, which began exactly as scheduled. If the current wave receives a five-wave internal structure, it can be considered the first impulse wave, and further declines in the pound can be expected (after the construction of a corrective wave 2 or b). However, there have already been two unsuccessful attempts to break through the 127.2% Fibonacci level, and the latest decline in quotes may be the fifth wave in 1 or a, or corrective as part of a new upward wave of a larger scale.
The pound takes a timeout.
The exchange rate of the pound/dollar pair rose by 40 basis points on Thursday, but the amplitude of the movements yesterday and today has been low. Demand for the pound is gradually increasing, but it is too early to discuss constructing an upward wave (even a corrective one). The two unsuccessful attempts to break through 1.2620 and the internal structure of the first descending wave of the new trend segment, in which five waves can be seen, indicate such a wave. Then this wave becomes impulsive, and we await a three-wave upward movement, followed by a new strong decline.
Today, the US released reports on initial and continuing jobless claims. These figures were openly disappointed with their "staleness." The initial claims were 239 thousand, compared to market expectations of 240 thousand. The number of continuing claims was 1.716 million, against expectations of 1.7 million. The latter indicator was slightly against the US currency, which could explain its slight decline today. However, the pair's rise may be completely unrelated to these reports, as there is now a high probability of building a corrective wave.
Tomorrow in the UK, there will be a report on retail trade, which is unlikely to support the pound strongly. All the most important reports in Britain this week have already been released, and I cannot say that they have charged buyers with optimism. Inflation is still high, and the unemployment rate is rising. The market will not find the strength to raise the pound higher than within the framework of a standard corrective wave.
Overall conclusions.
The wave pattern of the pound/dollar pair suggests a decline. As I advised, my readers could have opened sales a few weeks ago, and now they can close them. The 1.2620 mark has been successfully reached. There is a risk of completing the current downward wave, whether it is wave d or even if it is wave 1 of a new trend segment. We are now observing the construction of a corrective wave as part of a new bearish trend segment. If this is the case, the pair will not rise much above the 1.2840 mark, and then the construction of a new bearish wave will begin.
The picture is similar to the euro/dollar pair on a larger wave scale, but there are still some differences. The descending corrective segment of the trend is complete, and the construction of a new ascending segment continues, which may already be complete or take on a full-fledged five-wave form.
