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Wave analysis of GBP/USD for August 19. Pound took FOMC protocol closer to heart

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The wave counting for the Pound/Dollar instrument still looks quite clear at this time, but, unfortunately, it begins 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 section 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 is 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. However, 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 85 basis points on Thursday. There was no news background for the British pound today, although the markets could continue to increase demand for the dollar due to yesterday's FOMC protocol. Although usually if there is news of this scale, the demand for the US dollar decreases or increases simultaneously for both instruments. In our case, the euro currency has not lost anything today, and the British pound has lost 85 points. In both cases, the wave structures of the downward trend section and the waves look fully equipped. And a further decline in quotes will lead to the need to refine the wave count. Thus, I would say that a further decline in the quotes of both instruments is not necessary for the market and will only confuse the whole picture. A report on changes in retail trade volume is scheduled for Friday in the UK, and this will be the last interesting event of the week of an economic nature. The pound urgently needs market support, so it will count on strong retail trade data. In addition, an unsuccessful attempt to break through the 1.3644 mark is possible, which corresponds to 38.2% according to Fibonacci, which will also indicate the possible beginning of the construction of an upward wave c. Nothing interesting will happen in the United States tomorrow.

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 1.4240 mark, which corresponds to 0.0% Fibonacci. 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 count.

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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. 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 - www.instaforex.com