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25.04.202416:52 Forex Analysis & Reviews: Analysis of GBP/USD on April 25th. The dollar suffered a local defeat to win the war

For the GBP/USD pair, wave analysis remains quite complex but may become clearer in the coming weeks. A successful attempt to break through the Fibonacci level of 50.0% indicates the market's readiness to build a downward wave 3 or c. If this wave does continue to develop, the wave pattern will become much simpler, and the threat of complicating the wave analysis will disappear.

As I have already noted, the wave pattern should be simple and understandable to work with. There needs to be more simplicity and understanding in recent months. For a long time, the pair has been in a sideways movement and only now has real chances of building an impulsive downward wave.

In the current situation, my readers can expect the construction of wave 3 or c, the targets of which are below the low of wave 1 or a. Therefore, the pound should decline by another minimum of 300–400 basis points. With such a decline, wave 3 or c will be quite small; I expect a much larger decline in quotes. The news background supports the US dollar, and after breaking through the level of 1.2469 (50.0% Fibonacci), the psychological blockade on sellers has been removed.

Sellers return to the market.

The GBP/USD pair rate managed to rise by 65 basis points on Thursday and then fall by the same amount. In the first half of the day, there was no news background, and the market was busy building an internal corrective wave as part of wave 3 or c. In the second half of the day, the US released GDP data, which hardly anyone can interpret unequivocally in favor of the US currency. It was more negative than positive. However, if this report is a barrel, then at least 30–40% of its volume is honey. In other words, the market had reasons to increase demand for the US currency today.

There are several reasons for this:

  1. The downward trend section and impulsive downward wave construction are still ongoing for the pair. Therefore, any upward correction is only a local corrective wave.
  2. The US GDP report for the first quarter could have been more straightforward, but it still indicates fairly good growth in the US economy. And when was the last time we saw growth in the British economy?
  3. The key factor for the market is the Bank of England and the Fed rates, which continue to work in favor of the US currency.

The FOMC continues to signal that there should be no talk of monetary policy easing before the end of this year. Such rhetoric is very different from the market's expectations regarding the Bank of England rates, which, according to general opinion, could start to decline as early as July or August. Certainly, there can be no complete certainty about this, as the same market and the same economists were confident in the Fed rate cut in March. But still, the news background is currently in favor of the dollar and sellers.

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 level of 1.2039, as wave 3 or c is starting to develop. A successful attempt to break through the level of 1.2472, which corresponds to 50.0% Fibonacci, indicates the market's long-awaited readiness to build a downward wave.

On a larger wave scale, the wave pattern is even more eloquent. The downward corrective section of the trend continues to develop, and its second wave has taken on an extended form—up to 76.4% of the first wave. An unsuccessful attempt to break through this level could have led to the start of wave 3 or c construction.

The main principles of my analysis:

  1. Wave structures should be simple and understandable. Complex structures are difficult to play with, often bringing about changes.
  2. If there is confidence in what is happening in the market, it is better to avoid entering it.
  3. There can never be 100% certainty about the direction of movement. Remember about Stop Loss protective orders.
  4. Wave analysis can be combined with other types of analysis and trading strategies.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

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