The wave analysis for the pound/dollar pair remains relatively clear and, at the same time, continues to become more complex. The construction of a new bearish trend section continues, with the first wave having an extensive appearance. The second wave also turned out to be quite extensive, which gives us every reason to expect the prolonged formation of the third wave.
At the moment, I am not confident that the construction of wave 2 or b is complete. The pullback from the peaks is too small to consider it a guaranteed start of wave 3 or c. The increase in the pound's quotes against the backdrop of meetings of the Bank of England and the Federal Reserve has led to significant growth, and now wave 2 or b has taken on a five-wave form. However, it remains a corrective wave and should end soon (or may have already ended). Targets for the pair's decline within wave 3 or c are located below the 1.2039 level, which corresponds to the low of wave 1 or a.
Unfortunately, wave analysis tends to become more complex, and the news background only sometimes corresponds to it. At the moment, I am not abandoning the working scenario, but the danger of transforming the entire wave structure is present.
The pound won't decline until it surpasses 1.2627
The exchange rate of the pound/dollar pair decreased by only 25 basis points on Monday. The decline is very weak and almost invisible on the charts. All we have seen in recent weeks is the pair remaining almost unchanged near the previously reached highs. However, the pound may become a hostage to its high position.
On the chart, the rejection of the 23.6% Fibonacci level is visible, an unsuccessful attempt to break this level. A little earlier, quotes came close to this level, and now they have approached it for the second time. Therefore, strong pending sell orders are located near this level. If this assumption is correct, the pair may resume its decline in the near future with targets located near the 38.2% level, which the market has retested many times in the past month. From this, we can assume that pending buy signals are located near the 38.2% level.
Buyers and sellers are tugging the rope between the levels of 1.2620 and 1.2793. But they cannot remain in this range forever. Sooner or later, the will of one side will be broken. Accordingly, we need to wait for this moment. Of course, everything will not look so beautiful and straightforward in practice, but it will be something because the pair is currently in a horizontal movement. And in horizontal movement, you cannot earn much, and you cannot build significant wave structures. What is the point of waves of the same, small size that constantly alternate with each other? Therefore, we expect a bearish wave 3 or c formation and await corresponding confirmations.
General Conclusions:
The wave picture of the pound/dollar pair suggests a decline. At the moment, I am considering selling the pair with targets located below the 1.2039 level because wave 2 or b should ultimately end and may end at any moment. There are already some signs of its completion. However, I do not recommend rushing with conclusions and sales. I would wait for a successful attempt to break the 1.2627 level, after which it will be much easier to believe in the pair's further decline.
The picture is similar to the euro/dollar pair on a larger wave scale, but there are still some differences. The downward corrective section of the trend continues to be constructed, and its second wave has already acquired an extended form, at 61.8% of the first wave. An unsuccessful attempt to break this level may lead to the start of wave 3 or c construction.
