For the Pound / Dollar instrument, the quotes continue to move away from the highs reached this week, and so far it does not fit well into the internal wave structure of the expected wave 3 or from… Thus, there is reason to believe that the instrument will move in triplets in the near future. We saw the first three downward in February-March, the next three upward was built in March-April. Thus, the last upward wave may already be completed, and if this is indeed the case, then it is a wave from and, therefore, the formation of a new three downward can now begin. If this assumption is correct, then in the coming weeks the instrument will decline to the area of the 36th figure.
The news background for the Pound / Dollar instrument on Friday was controversial. On the one hand, the statistics from Britain turned out to be strong, on the other hand, the statistics from America were also strong. Thus, in the first half of the day quotes went up, and in the second – down. In general, the movements of today fully fit into the current counting, if the wave from really from and completed. The most unexpected was the retail trade report. Taking into account fuel costs, the indicator increased by 5.4% MoM, and excluding – by 4.9%, although the markets expected much lower values. Business activity reports also showed positive dynamics. In the service sector, it rose to 60.1 points, and in the manufacturing sector – to 60.7. However, after the release of these reports, the demand for the pound sterling did not grow too much: the instrument added only about 30 basis points. And in the second half of the day began to decline, as the indexes of business activity in the US were also strong enough. Thus, the movement of the instrument is in full accordance with my expectations about the construction of a new downward wave. I cannot conclude that the Briton is now declining due to events in Northern Ireland or due to the aftermath of Brexit. Nevertheless, if the markets take into account the news background at least a little, then the demand for the Briton should decrease in the future. So far, the downside potential of the instrument is limited by the 36th figure, since I do not expect more than three downward waves, but based on the news background, the Briton may decline much lower.
At this time, the wave pattern has cleared up a bit, so now I recommend selling the instrument for each MACD signal downward, counting on the formation of a new three downward waves. However, the wave counting still does not look completely unambiguous and may still require some additions and adjustments.
The part of the trend, originating on September 23, took a five-wave, fully completed form. Thus, this part of the trend is supposedly completed, and the part of the trend after it can take either a horizontal form of alternating triplets, or three downward waves have already been completed, and now the construction of a new uptrend part has begun, which will bring the instrument above the peak of the wave 5 in 5… Also, the option with the construction of a top-down structure is not completely ruled out. a—b—c—d—e, which has already been completed, and now a new ascending section is being built.