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Wave analysis of GBP/USD for August 20. Markets are tired of selling the pound around 36th figure


The wave counting for the Pound/Dollar instrument at this time still looks quite clear, but, unfortunately, it continues to get confusing. The assumed wave b continues its construction and it turns out to be too deep. Although the second chart (below) clearly shows that waves a and b of the previous upward trend segment are also almost the same size, which did not prevent the instrument from rising by another 600 basis points later. However, the current wave b casts doubt on the assumption that the new upward section of the trend will be impulsive. Now the wave counting looks like another corrective section of the trend, which can take a three-wave form. And the assumed wave b may well correspond in size to wave a. That is, equal to 90-100 percent of its size. If you look at all the wave structures over the past six months, their distinctive feature is quite deep corrective waves. In addition, all these structures are corrective, so it is very difficult to expect the instrument to go beyond the range of 1.3600-1.4240. I am still waiting for the completion of the decline in quotes and the construction of a new upward wave, presumably c.

The Pound/Dollar instrument fell by 35 basis points on Friday, but around the 36th figure, the quotes began to move away from the reached lows. The news background today was quite important for the pound. The retail trade report in the UK was released in the morning, which states that volumes decreased by 2.5% MoM in July, taking into account fuel consumption. Excluding fuel costs, the pound began to spend less by 2.4% MoM compared to June. The markets were waiting for much higher and at the same time positive values. Thus, the decline in the quotes of the pound sterling continued naturally. However, here is the paradox. Yesterday, when there was no news background, the sterling fell by 120 basis points. And today, when the news background was also strong, sterling fell by only 35 and has already rushed up. Perhaps the markets are already tired of selling the pound sterling, which gives hope for the completion of the construction of wave b and the transition to the construction of wave c, the targets of which will be located at least at the 40th figure. That is, there is a growth potential equal to 400 basis points. However, a decrease below the low of wave e of the previous downward trend segment is likely to lead to adjustments to the entire wave count of the instrument.

The wave pattern is now more or less clear. I continue to count on the construction of a new upward wave, so at this time I propose to consider buying the instrument for each MACD signal "up" with targets located near the 1.4000 mark. The instrument is still at the stage of constructing a corrective wave 2 or b and its construction is being greatly delayed, which can negatively affect the integrity of the current wave counting.


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. If the information background does not interfere, then the increase in quotes should resume in the near future.

The material has been provided by InstaForex Company -