For the pound/dollar pair, the wave analysis remains quite simple. The construction of a new downward trend section continues, and its first wave has taken on a rather extended form. There is no reason for the British currency to resume an upward trend, so I do not even consider such a scenario. The assumed wave 1 or a is complete. On the euro, wave 2 or b already has a five-wave structure, while it has taken on a three-wave form on the pound. Thus, for both pairs, wave analyses currently suggest a potential resumption of the decline. This is the moment I have been waiting for. For the British pound, wave 2 or b should have taken on a minimum three-wave form to expect its completion for both pairs. However, waves 2 or b currently have an overly extended form, which could have been better with the news background.
The wave picture currently looks good and convincing. If not for a series of weak reports from the United States, we would most likely have already seen a continuation of the decline in the pair, becoming even more convinced of the transition to wave 3 or c construction. Wave c in 2 or b has become a triangle, indicating its imminent completion.
Not even a positive GDP report helped the dollar
The pound/dollar pair declined by 5 basis points on Wednesday. In my previous articles, I have already drawn readers' attention to the fact that the U.S. currency currently lacks market support, regardless of the news background. We are accustomed to the idea that positive news from the United States leads to a rise in the dollar, and negative news leads to a fall. Now, this pattern is distorted beyond recognition. The new reality is this: if news from the United States is positive, the market does not react; if the news is negative, the market willingly reduces demand for the dollar.
Today is proof of this. This week's very first report in America turned out to be significantly better than all forecasts. The U.S. economy grew not by 4.9% in the third quarter but by 5.2%. Some of my readers may not quite understand what these figures mean. All leading economists have been predicting a recession for the U.S. economy for over a year.
Meanwhile, quarterly economic growth has been 2.7%, 2.6%, 2.2%, 2.1%, and now 5.2%. In other words, the U.S. economy is not just growing against all forecasts; it is also accelerating. It's hard to imagine a more positive report for the dollar. Still, the market ignored this crucial indicator, again showing that it is not interested in any positive news from America.
In general, the wave pattern suggests a rise in the U.S. currency; occasionally, the positive news is present, but the market refuses to increase demand for the dollar.
General conclusions
The wave pattern of the pound/dollar pair suggests a decrease within the descending trend section. The maximum the British Pound can count on is a correction. I recommend selling the pair with targets below the 1.2068 mark because wave 2 or b must eventually be complete, and it may do so at any moment. The longer it takes, the stronger the decline in the British pound will be. The narrowing triangle is a precursor to the completion of the movement. However, I still recommend waiting for signals indicating the end of the corrective wave.
The picture is similar to the euro/dollar pair on a larger wave scale, but there are still some differences. The descending correctional trend section continues its construction, and its second wave has already taken on an extended form - at 61.8% of the first wave. An unsuccessful attempt to break this mark may lead to the start of the construction of wave 3 or c.
