The wave pattern for GBP/USD remains quite complex and ambiguous. A successful attempt to break the 50.0% Fibonacci level in April indicated the market's readiness to form a downward wave 3 or C. Still, since then, we have only seen an upward movement. If this wave resumes its formation, the wave pattern will become much simpler, and the threat of complicating the wave count will disappear. However, in recent weeks, there has been a complete absence of decline in the instrument, which again raises doubts about the market's readiness for sales.

In the current situation, my readers can still expect the formation of wave 3 or C, with targets located below the low of wave 1 or A at the 1.2035 mark. Therefore, the pound should decline by at least another 700-800 basis points from current levels. With such a decline, wave 3 or C will be relatively small, so I anticipate a much larger drop in quotes. Building the entire wave 3 or C may take a lot of time. Wave 2 or B lasted for 5 months, and it was just a corrective wave. The recent corrective wave was very prolonged, but the unsuccessful attempt to break above the 1.2822 mark once again allows us to look downwards.

The pound aims to return to 1.2730

The GBP/USD rate increased by 25 basis points on Monday. Today's news background did not influence market sentiment, and the amplitude of movements was very low. The only reason for the increase was an unsuccessful attempt to break the 1.2627 mark, which I mentioned over the weekend. Now, the instrument may start to rise towards another important level at 1.2730, which I also discussed in my recent reviews. The movement this week is unlikely to be strong, as there are a few important events scheduled. For example, on Tuesday and Wednesday, there are no expectations for any news from Britain or America. Therefore, the market may continue to respond to the signal from the 1.2627 mark observed on Monday. Consequently, further upward movement towards the next significant level is likely.

However, I do not expect the upward trend to resume or continue - call it what you will. The news background and wave analysis still do not suggest a strong rise in the pound from current levels. Most likely, after some time, the market will test the 1.2627 mark again, and this attempt to break through will be successful. Therefore, we should expect a local reversal and movement back towards the 1.2627 mark in the coming week or two.

General conclusions

The wave pattern of the GBP/USD instrument still suggests a decline. At the moment, I continue to consider selling the instrument with targets below the 1.2039 mark, as I believe that wave 3 or c has not been canceled yet. Since the instrument reversed around the 1.2822 mark, not far from the peak of the presumed wave 2 or b, selling the instrument can be considered with initial targets around the 1.2315 mark. However, caution is advised because confidence in the market sentiment shifting bearish will come after a successful attempt to break the 1.2627 mark.

On a larger scale, the wave pattern is even more illustrative. The descending corrective segment of the trend continues its formation, and its second wave has taken on an extended form, reaching 76.4% of the first wave. The unsuccessful attempt to break this mark could have led to the beginning of constructing wave 3 or c, but currently, a corrective wave is forming.

The basic principles of my analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to play out and often involve changes.
2. If there is confidence in what is happening in the market, it's better to avoid entering it.
3. There is never a hundred percent certainty in the direction of movement. Remember protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.