The wave analysis for the GBP/USD pair remains quite complex. For several months now, we have been observing movements between the Fibonacci levels of 50.0% and 23.6%. Horizontal movement is not the best for wave analysis. As I have already noted, the wave pattern should be simple and understandable in order to work with it. Currently, there needs to be more simplicity and clarity. If the presumed wave 2 or b is indeed complete, then the construction of the expected wave 3 or c has begun. However, there are many doubts about this scenario because the market is currently in another sideways movement.

Moreover, only the British pound is in a sideways movement. The euro, which trades 80% similarly, is in the process of forming a downward trend segment. From this fact alone, we can understand that something is wrong with the British pound. If this is visible to the naked eye, trading the pound is associated with increased risks. In the current situation, my readers can only hope for the construction of wave 3 or c, the targets of which are located below the low of wave 1 or a. Therefore, the pound sterling should decline by another minimum of 600 basis points.

The pound still has a chance to decline to the 1.25 figure, but what's next?

The GBP/USD pair declined by 75 basis points on Monday and rose by 5 points on Tuesday. The day is certainly not over yet; by the end of the day, another important JOLTS report in the US should be released, showing how the number of job openings changed in February. As for yesterday's decline in the pair, it was caused by a strong ISM report on business activity in the US manufacturing sector.

Now, there are only about 50 points left to reach the 1.25 figure. If today's JOLTS report shows a strong value, this target will be reached. However, this decline changes little for the prospects of wave 3 or c development. Horizontal movement in the British pound has persisted for several months. The presumed wave 2 or b, with such market sentiment, may take an even more prolonged and complex form. If the JOLTS report today and the upcoming US economic reports for the rest of the week are not very positive, it is probable that we will witness a renewed surge in demand for the British pound.

Certainly, I would like to avoid such a scenario because, in this case, the construction of wave 3 or c will be postponed again. Waiting for the decline of the British pound, as indicated by practically all types of analysis, has become tiresome. However, the objective reality is that sellers need to try very hard to go down by at least another 100 points, which will allow us to conclude the start of wave 3 or c.

General Conclusions.

The wave pattern of the GBP/USD pair still suggests a decline. At the moment, I am still considering selling the pair with targets located below the 1.2039 mark, as wave 3 or c will sooner or later develop. However, until wave 2 or b is completed with a 100% probability, we can expect the pair to rise to the 1.3140 mark, which corresponds to 100.0% Fibonacci. The retreat from the last peaks still needs to be bigger to be confident in the start of wave 3 or c construction.

On the larger wave scale, the wave pattern is even more eloquent. The descending correctional segment of the trend continues to form, and its second wave has acquired an extensive form - at 76.4% of the first wave. An unsuccessful attempt to break through this mark could have led to the start of wave 3 or c construction.

The main principles of my analysis:

1. Wave structures should be simple and understandable. Complex structures are difficult to play with; they often bring changes.
2. If there is confidence in what is happening in the market, it is better to avoid entering it.
3. There is no 100% certainty in the direction of movement, and it can never be. Remember protective stop-loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.