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Wave analysis of GBP/USD for August 10. Markets trade sluggishly and await important reports from the UK and USA

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The wave counting for the Pound/Dollar instrument has become a little clearer recently. A few days ago, it was possible to say that the markets failed to make a successful attempt to break through the 23.6% Fibonacci level, but now the quotes have still slipped slightly below this mark. However, the instrument remains inside a new upward set of waves, and a slow slide down is the construction of a corrective wave. Therefore, I believe that the downward section of the trend is completed and has taken a five-wave form, and at this time I expect the construction of at least three upward waves. If this assumption is correct, then the increase in the quotes of the instrument will resume after the completion of the construction of the corrective downward wave b, which is being built at this time. The targets of the entire upward section of the trend are located near the maximum of the wave e. Therefore, I expect the instrument to increase by another 200-250 points at least. I would also like to draw your attention to the fact that a new upward section of the trend may turn out to be impulsive since its first wave already looks very impressive.

The Pound/Dollar instrument did not decline or rise on Tuesday. The instrument did not stand in one place during the day, but at the same time, the decline in quotes that were observed in recent days was already absent. Although, as I already said in the Euro/Dollar review, several members of the Fed board made statements on Monday and Tuesday that could increase demand for the US currency. However, if they did increase it, it was quite a bit. Now the markets are in some confusion. On the one hand, the latest nonfarm payrolls report turned out to be very strong, and the Fed representatives are already thinking about curtailing the asset purchase program and raising the rate. On the other hand, the latest GDP report turned out to be weaker than market expectations, inflation continues to rise, and Jerome Powell, unlike other Fed members, did not declare his readiness to start discussing the end of QE.

This week, as I have already mentioned, there will be two important reports for the pound and the dollar. On Wednesday, that is, tomorrow, a report on inflation in the US will be released and the markets will find out whether it has continued to accelerate, thereby increasing the chances of a faster end of QE. And on Thursday, a report on UK GDP will be released, which will show how quickly the British economy is recovering, which is still experiencing certain problems with the consequences of Brexit and the coronavirus pandemic.

At this time, the wave pattern is more or less clear. 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, I propose to consider buying the instrument for each MACD signal "up" with targets located near the 1.4240 mark, which corresponds to 0.0% Fibonacci. The instrument is currently at the stage of constructing a corrective wave 2 or b, but the wave is weak and it is unlikely that the instrument will fall below the 1.3770 mark.

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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.

The material has been provided by InstaForex Company - www.instaforex.com