Regarding the pound/dollar pair, the wave analysis remains quite clear and, at the same time, complex. The construction of a new downtrend segment of the trend continues, with the first wave taking on quite extensive form. The second wave also turned out to be quite extensive, giving us every reason to expect the prolonged construction of the third wave.
At the moment, I am not entirely certain that the construction of wave 2 or b is complete. The retreat of quotes from the achieved peaks is too small to consider it a guaranteed start of wave 3 or c. Wave 2 or b has already taken on a five-wave form, but it remains corrective and should be completed soon (or may already be completed). Nevertheless, we continue to observe the construction of new and new internal waves, which are currently challenging to attribute to any specific higher-scale wave.
The targets for the decline of the pair within the assumed wave 3 or c are below the level of 1.2039, corresponding to the low of wave 1 or a. Unfortunately, wave analysis tends to be complicated and does not correspond to the news background. At the moment, I do not abandon the working scenario; a successful attempt to break through the 38.2% Fibonacci level indicates the market's readiness to sell the British pound.
The bulls continue to retreat for the second day in a row.
The pound/dollar pair rate fell by 40 basis points on Tuesday and another 25 today. On the charts, the decline of the British pound looks impressive, but in numerical terms, it is even less than 100 basis points. Yesterday, I expressed significant doubts about the ability of the British pound to continue its decline and the market to reduce demand for it. Today, I can only confirm these words. For two consecutive days, the news background has provided enhanced support for the American currency, and over these two days, we have not seen a decrease even by 100 points. Certainly, British reports on unemployment and wages cannot be disregarded, as they increased demand for the pound on Tuesday. But in the end, it turns out that the British pound has lost very little over the past day. The bulls will find it relatively easy to regain these positions.
Unfortunately, doubts about the readiness to build wave 3 or c are still much greater than confidence. It seems that the market has gradually started reducing demand for the pound, but I have already mentioned that leaving one sideways movement, the pair immediately found itself in another, slightly wider one. Over the past three months, all movements have been between Fibonacci levels of 50.0% and 23.6%. Therefore, sellers will have to try very hard again to confirm their intentions (if they exist at all).
General conclusions.
The wave pattern of the pound/dollar pair suggests a decline. At the moment, I am considering selling the pair with targets below the level of 1.2039 because wave 2 or b cannot last forever, just like sideways movements. A successful attempt to break through the level of 1.2627 became a signal for sales. Another signal was formed yesterday in the form of an unsuccessful attempt to break this level from below. Now I have a slight confidence in the decline of the pair, at least to the level of 1.2468, which would already be a significant achievement for the dollar, whose demand remains very low.
On a higher wave scale, the picture resembles the euro/dollar pair, but there are still some differences. The descending corrective segment of the trend continues its construction, and its second wave has taken on an extensive form – at 61.8% from the first wave. An unsuccessful attempt to break this level may lead to the beginning of the construction of wave 3 or c.
