Forex Analysis & Reviews: 05.04.2022 - GBP/USD analysis on April 5....

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05.04.2022 06:11 PM

GBP/USD analysis on April 5. The UK is increasing pressure on the Russian Federation.

For the pound/dollar instrument, the wave markup continues to look very convincing and does not require any additions. The assumed wave d in E is completed, and there should be five waves in total inside the wave E, respectively, as in the case of the euro/dollar instrument, the downward trend section can continue its construction for some time. The assumed wave d in E may take a longer, three-wave form. This is supported by the fact that wave b in E has taken a five-wave, extended form. Also in favor of this is the unsuccessful attempt to break the low wave c in E. Thus, the instrument simply could not break through the 76.4% Fibonacci level and now the construction of a new upward wave has begun. This wave can be corrective, internal in the composition of e in E, or it can be the beginning of wave c-d-E. In the first case, the decline in the British dollar quotes should resume in the near future, in the second case, the instrument may return to the 1.3274 mark, which corresponds to 61.8% Fibonacci. But one way or another, I expect the construction of the wave e in E.

The dollar is waiting for a failure in the negotiations between Kyiv and Moscow.

The exchange rate of the pound/dollar instrument increased by only 30 basis points on April 5. The increase during the day was stronger, but in the afternoon a decline began, which devalued the entire advantage of the British in the first. Business activity indices have also been released in the UK today. In the service sector - an increase from 61.0 to 62.6 points, composite - from 59.7 to 60.9 points. However, this information did not interest the market. But the ISM business activity index in the US, which rose from 56.5 points to 58.3, caused modest dollar purchases after its release. I cannot say that something has changed dramatically in the business activity of the US services sector since the key mark is the level of 50.0. Anything above it is considered a positive value. Consequently, everything was fine, but it got a little bit better.

The pound is now completely at the mercy of the geopolitical conflict between the Russian Federation and Ukraine, in which almost all European countries, including the UK, have been involved in one way or another. Let me remind you that European countries are actively supplying weapons and financial and humanitarian aid to Ukraine. In addition, they impose sanctions that are destructive to the Russian economy, which affect them themselves. As recently as today, the UK started talking about tightening sanctions against the Russian Federation based on war crimes committed in the Ukrainian city of Bucha, where several hundred bodies of dead civilians were found after the withdrawal of Russian troops. "We must start a new powerful wave of sanctions against the Russian Federation. The reality is that Russia continues to receive money from the West, which supports the Kremlin's military machine. This must stop," said British Foreign Secretary Liz Truss. Probably, Truss means just the fifth package of EU sanctions, which are currently being discussed on the sidelines of the alliance. An even greater deterioration in relations between the West and Russia may lead to an even greater decline in the European and British, which fully corresponds to the current wave marking.

General conclusions.

The wave pattern of the pound/dollar instrument still assumes the construction of wave E. I continue to advise selling the instrument with targets located near the 1.2676 mark, which corresponds to 100.0% Fibonacci, according to the MACD signals "down", since wave E does not look completed yet. Wave d can take a three-wave form and lengthen - wave b turned out exactly like this, but in any case, we should consider the signals "down", and while wave d continues to build, the MACD indicator is mainly rising.

At the higher scale, wave D looks complete, but the entire downward section of the trend does not. Therefore, in the coming weeks, I expect the decline of the instrument to continue with targets well below the low of wave C. Wave E should take a five-wave form, so I expect to see the quotes of the British near the 27th figure.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.