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13.05.2024 05:32 PM
Analysis of the GBP/USD pair on May 13, 2024

The wave analysis for GBP/USD remains quite complex. A successful attempt to break through the Fibonacci level of 50.0% in April indicated the market's readiness to build a downward wave 3 or c. If this wave indeed continues its construction, the wave pattern will become much simpler, and the threat of complicating the wave analysis will disappear. However, in recent weeks, the pair's decline has been absent, which again raises doubts about the market's readiness for sales.

As I have already noted, the wave pattern should be simple and understandable in order to work with it. For a long time, the pair was sideways, and only now has there been an opportunity to build an impulsive downward wave. However, wave structures remain very complex, with a large number of corrective waves.

In the current situation, my readers can still count on the construction of wave 3 or c, the targets of which are located below the low of wave 1 or a at 1.2035. Therefore, the pound should decrease by at least another 500-600 basis points from the current levels. With such a decrease, wave 3 or c will be relatively small, but I expect a much larger decline in quotes. However, it may take a lot of time to build the entire wave 3 or c. Wave 2 or b took 5 months to build.

The GBP/USD pair rate rose by 35 basis points on Monday, although there were no reasons for it. Such an increase should not upset those who are waiting for the pound to fall, like me. It is too weak, and the pound has only recently had enough news support. A few months ago, there was none. On Monday, the market seemed to remember the Friday reports and rushed to play them out. In the first half of Friday, optimistic GDP and industrial production data were released, which the Europeans managed to play out somewhat, but the Americans ignored them. Today, the situation was reversed. In the first half of the day, the pair stood still, and in the second half, it began to rise. Therefore, the market could indeed remember the decent statistics from Britain today and play it out.

This is not obvious and quite strange. Thus, any movement of the pair can be described. It is only necessary to find the corresponding news in the past. Moreover, there is no guarantee that this is a reaction to the very news. However, the fact remains: in recent weeks, the market has had reasons to increase demand for the pound. However, the overall news background still does not allow for a strong rise in the pound, and the wave pattern predicts its decline. There are no new sell signals yet, but, for example, an unsuccessful attempt to break through the 1.2626 mark may return the market to a downward trend.

General Conclusions

The wave pattern of the GBP/USD pair still suggests a decline. At the moment, I am still considering selling the pair with targets below the 1.2039 mark as wave 3 or c continues its construction. An unsuccessful attempt to break through the 1.2625 mark, which is equivalent to 38.2% Fibonacci, indicates the completion of the internal corrective wave within 3 or c. However, the 1.2470 mark prevented the Briton from continuing the construction of the downward wave.

On a larger wave scale, the wave pattern is even more eloquent. The downward correctional trend continues its construction, and its second wave has acquired an extended form - at 76.4% of the first wave. An unsuccessful attempt to break through this mark could have led to the start of the construction of 3 or c, but currently, a corrective wave is being built.

The main principles of my analysis:

  1. Wave structures should be simple and understandable. Complex structures are difficult to play; they often bring changes.
  2. If there is confidence in what is happening in the market, it is better to avoid entering it.
  3. There is never one hundred percent certainty in the direction of movement, and there never can be. Remember protective Stop Loss orders.
  4. Wave analysis can be combined with other types of analysis and trading strategies.
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