The last few days were quite turbulent for all markets. The cryptocurrency market grew significantly, while the currency market got rid of U.S. currency. And at first glance, everything makes sense, but at the second - everything is not so unambiguous. Let me remind you that it all started last Tuesday with Federal Reserve Chairman Jerome Powell's speech in Congress. He almost openly stated that the rate may rise by 50 basis points after the March meeting, and there may be more hikes in 2023 than it was expected before. And so the demand for the dollar increased. There were a few days of lull after that, and then important reports came out on Friday. The unemployment rate rose to 3,6%, and the number of payrolls crossed 300,000 with lower forecasts. How did market participants interpret this data? They thought the unemployment rate was more important and the Fed Funds rate could not be raised 50 points with rising unemployment. Although I think that is a rather strange conclusion, given that the FOMC relies more on NonFarm Payrolls. Nevertheless, the market decided. And on Saturday and Sunday we learned about the collapse of two banks...
And it turns out that the market has received an enormous amount of news and events in just a week, each of which allows for different conclusions, and some of which allow for no conclusions at all. The FOMC members have never commented on the collapse of the banks, moreover, on the future session, and the rate decision and they will not be able to do that anymore, because they are not allowed to give interviews 10 days before the session. On what basis did the market conclude that the rate will not rise by even a quarter point in March? If we forget about Powell's speech, who already mentioned that the final decision has not been made yet, then it is too early to talk about 50 points, and also the Fed was supposedly set for a "planned" tightening. Consequently, nothing has changed in the week since his first speech to Congress. Only the demand for U.S. currency has plummeted. I believe that this very moment may eventually play a cruel joke on buyers, many of whom no longer believe in the fall of both instruments.
The European Central Bank meeting will be held this week, but there is no more intrigue. The market is confident of a 50-point interest rate hike and has long considered this change. Consequently, the market will have no reason or grounds to increase demand on Thursday. Unless ECB President Christine Lagarde announces that the central bank is ready to keep the pace of tightening of the last two meetings. The market is expecting a 25-point hike in May, and if it begins to realize that another "double" hike might follow, it could cause the euro to rise again. But I don't think Lagarde will talk openly about the May meeting and rates. Everything goes to the point that the b wave of the euro will soon come to an end after all.
Based on my analysis, I conclude that the construction of the uptrend section is complete. So now we can consider short positions with targets located near 1.0284, which corresponds to the 50.0% of Fibonacci. At this time, correctional wave 2 or b may still be under construction, in which case it will take a more extended form. It is now advisable to open shorts on the MACD's bearish signals.
The wave pattern of GBP/USD suggests building a downtrend. At this time, it is possible to consider shorts located near 1.1641, which is equal to 38.2% Fibonacci, since the MACD turns bearish. A Stop Loss order could be placed above the peaks of waves e and b. Wave c may take a less extended form, but for now I expect a decline of another 300-400 pips at least (from the current marks).
