29.07.202119:30 Forex Analysis & Reviews: Wave analysis of GBP/USD for July 29. American statistics finish off the US dollar

Exchange Rates 29.07.2021 analysis

The situation for the Pound/Dollar instrument cleared up after yesterday's Fed meeting, which caused a decrease in demand for the US dollar. Thus, the quotes of the instrument continued to increase, which now looks very convincing and definitely does not fit into the wave counting of the previous downward trend section. I believe that this section of the trend has already been completed. Thus, I expect the construction of at least three upward waves. If this assumption is correct, then the price increase will resume after the construction of a corrective downward wave, and the targets of the entire upward trend section are located near the maximum of wave e. Therefore, I expect the instrument to increase by another 200-250 points at least. I also draw your attention to the fact that the first wave of a new upward trend segment looks completely different from any wave between February 24 and July 20. Thus, a new section of the trend has a good chance of becoming impulsive. In this case, we are waiting for not just three upward waves, but five.

The Pound/Dollar instrument increased by another 70 basis points on Thursday. After the Fed announced the results of its meeting, the US currency fell by 35 points. It should be said that the results of the meeting and Powell's speech were quite neutral, so there was no strong reaction to them. However, in general, the latest news from the UK was not encouraging, and also not upsetting, but the news from the US comes mostly negative. In the UK, the number of COVID cases continues to decrease day by day, and vaccination continues in full swing. In the US, the Fed does not intend to tighten monetary policy, inflation is growing, the QE program continues to fill the economy with money. This afternoon, the GDP report for the second quarter was released, which showed that everything is not as good as the markets expected.

Recently, it has been assumed that the American economy continues to accelerate. However, GDP for the second quarter showed a value of 6.5%, which turned out to be much lower than market expectations. Thus, for the second time in two days, the demand for the US currency has decreased, and the markets continue to look in the direction of building a new upward trend section. So far, the news background does not give any reason to expect a strong decline in the quotes of the instrument. Also, reports on applications for unemployment benefits were published in the United States. The number of initial claims amounted to 400,000, although the markets expected to see 382,000. The number of continuing claims amounted to 3.269 million, although the markets were counting on the figure of 3.196 million. Thus, these reports turned out to be weaker than expected and caused a decrease in demand for the dollar.

At this time, the wave pattern has become a little clearer. The construction of the downward trend section is completed. I continue to count on the construction of a new upward trend section, so at this time it is possible to buy the instrument for each MACD signal "up" with targets located near the 1.4240 mark, which corresponds to 0.0% Fibonacci, for each MACD signal "up".

Exchange Rates 29.07.2021 analysis

The upward section of the trend, which began its construction a couple of months ago, has taken a rather ambiguous form and has already been completed. A new section of the trend can get an impulse form, its first wave has already acquired a sufficiently extended form and exceeded the peaks of waves b and d. The chances of a new strong increase in quotes are growing.

*La presente analisi del mercato ha un carattere esclusivamente informativo e non rappresenta una guida per l`effettuazione di una transazione.

Chin Zhao,
Esperto analitico di InstaForex
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