30.05.202319:09 Forex Analysis & Reviews: Analysis of GBP/USD on May 30, 2023

The wave analysis of the pound/dollar pair must still be more complex and clear. It does not resemble a classical corrective or impulsive trend section. Currently, the pound continues to build an upward trend section, and starting from March 8th to May 10th, I can identify only one wave of the current scale. Therefore, there are good reasons to believe that forming a new trend section will take a lot of time, and the section itself will be extensive.

Both pairs should build similar wave formations. If this is indeed the case, then wave 2 or b for the pound may take an elongated form, while at the same time, a descending three-wave pattern may be constructed for the euro. Thus, I expect a deep wave b, just like in the case of the previous three-wave pattern, where wave b accounted for 100% of wave a. Therefore, we can expect a decline in the pair to the level of 1.1850 or slightly above. At the moment, wave 1 or a has all the necessary grounds to be considered complete. The recent increase in quotes should not hinder the formation of wave b.

The market increased demand for the pound but will not sustain the impulse. The exchange rate of the pound/Dollar pair increased by 70 basis points on Tuesday, which is not very significant. The demand for the pound rose quite unexpectedly today, as there was no news background throughout the day. The pair's increase looks impressive on lower timeframes, but on the 4-hour chart, it is nothing more than a regular pullback that we occasionally see. Therefore, I would not assume that the wave analysis is on the verge of collapse and that the pair will resume growth, which does not correspond to the current wave pattern. An unsuccessful attempt to break the Fibonacci level of 100.0% can push the pound back down, and the formation of a descending wave will continue.

Since there is no important news, let's talk about upcoming events. The news background is currently unable to influence the wave analysis. Even reports such as Nonfarm Payrolls and unemployment in the USA, which will be released on Friday. If these data turn out weak, we will see a new upward correction, but wave 2 or b is objectively too weak to be considered complete. However, I do not want to rely on chance or assumptions. A successful attempt to break the level of 1.2445 will indicate the market's readiness for purchases, and only in this case can we pause the plan's implementation with a decline in the pair down to the 18th figure. Wave b could be completed theoretically today, but confirmation is needed for this, not just a 70-point increase. At the same time, the demand for the euro currency almost does not increase, and we remember that pairs often move very similarly.

General conclusions:

The wave pattern of the pound/dollar pair has long suggested the formation of a descending wave. Wave b can be very deep since all recent waves are approximately equal. An unsuccessful attempt to break the level of 1.2445, which corresponds to 100.0% Fibonacci, will indicate the market's readiness for new sales. In this case, I recommend selling the pound with targets around the 23rd and 22nd figures. The decline in the pair can be even stronger.

The picture is similar to the euro/dollar pair on a larger wave scale, but some differences remain. The descending corrective section of the trend is completed, but at the moment, the formation of a descending wave may begin. And this wave can be deep and extensive, and the entire trend section can be horizontal, just like the previous one.