The wave analysis for the GBP/USD pair remains fairly clear and, at the same time, complex. The construction of a new downtrend section continues, the first wave of which took on a very elongated form. The second wave also turned out to be quite prolonged, giving us every reason to expect a lengthy construction of the third wave.

At the moment, I have no confidence that the construction of wave 2 or b is complete. Wave 2 or b has already taken on a three-wave form but has again become more complex due to the increase in the pound's quotes last week. Theoretically, wave 2 or b may extend to 100% of wave 1 or a. An unsuccessful attempt to break through the level of 1.2876, which corresponds to 76.4% according to Fibonacci, may indicate the long-awaited completion of the uptrend.

Targets for the pair's decline within the assumed wave 3 or c are below the level of 1.2039, corresponding to the low of wave 1 or a. Unfortunately, wave analysis has a tendency to become more complex and not correspond to the news background. At the moment, I do not abandon the working scenario, but the market does not see motives for long-term sales of the pair.

Bulls may start retreating on a large scale soon, but they haven't started yet.

The GBP/USD pair rose by just 10 basis points on Wednesday. Such a change in the pair's rate is unlikely to affect the current wave pattern. If the European currency had reasons for a decline on Wednesday, then the pound was 50/50. In the UK today, two more reports were released. GDP in January grew by 0.2%, in line with market expectations. That is, it can be said that this report did not surprise market participants. At the same time, industrial production in January fell by 0.2%, with expectations of 0%. Based on this, it could be assumed that there would be further demand for the British pound. But by the start of the American session, demand for the pound was increasing again.

There is no news background in America today, but the most interesting reports have already been released in January. Let me remind you that Nonfarm Payrolls exceeded market expectations, but the unemployment rate turned out to be worse. The ADP and JOLTS reports were neutral, and the inflation rate rose to 3.2%, which was generally in line with economists' forecasts. Consequently, American statistics did not help the market solve a difficult puzzle called "What to do with the dollar next?".

We can't expect much from the FOMC meeting on March 20 either. With a 99.9% probability, rates will remain at the same level, and Jerome Powell's rhetoric is unlikely to become softer, given the latest inflation report. But the market sees no reason to increase demand for the dollar, even with the current mood of the Fed. If it does not change, it is unlikely that the market will suddenly want to buy the US currency.

General conclusions.

The wave pattern of the GBP/USD instrument still suggests a decline. At the moment, I am considering selling the instrument with targets located below the 1.2039 mark, as I believe that wave 3 or c will begin sooner or later. Nevertheless, until wave 2 or b is completed (with one hundred percent probability), we can expect the instrument to rise up to the level of 1.3140, which corresponds to 100.0% Fibonacci. A successful attempt to break through the 1.2877 mark, which equates to 76.4% Fibonacci, will indicate the readiness of the market to further increase demand. However, it is currently unsuccessful, so the construction of wave 3 or c could have already begun.

On a larger wave scale, the picture is similar to the EUR/USD pair, but there are still some differences. The descending corrective trend continues its construction, and its second wave has taken on an elongated form – up to 61.8% of the first wave. An unsuccessful attempt to break through this level may lead to the start of the construction of wave 3 or c.

The main principles of my analysis:

Wave structures should be simple and understandable. Complex structures are difficult to play, they often bring changes.

If there is no confidence in what is happening in the market, it is better not to enter it.

There is never 100% confidence in the direction of movement. Don't forget about protective stop-loss orders.

Wave analysis can be combined with other types of analysis and trading strategies.