The trend section, which originated on September 23, finally took a complete five-wave form. In this case, the wave pattern can become much more complicated, but currently, everything seems to be a completed wave structure. Even last week's price growth of the instrument is still interpreted as a corrective wave b as part of a new downward correction pattern of waves. However, a successful attempt to break the high of the expected wave 5-5 will indicate the readiness of the markets to make new purchases of the pound.
In the smaller time frame, the wave marking also looks quite convincing and allows the option in which the entire section of the trend will take a more complex form. At the moment, the pair's quotes declined and began to retreat, while approaching the high of the expected 5 in 5. Thus, the current wave marking has been maintained and so, we can assume the construction of a descending wave c with targets located below the low of the expected wave a. At the same time, a successful attempt to break the maximum of waves 5 and b will indicate markets' desire to continue buying the British currency.
In terms of news background, a trade deal between the UK and the EU is likely to be signed by both parties today. However, this is just a formality, which no longer has any special meaning. London and Brussels have already agreed and this is the most important thing. Nevertheless, the markets can still see today's event as a positive development. Moreover, if we also consider the evening news from the United States, where Congress approved to increase the one-time financial aid to Americans from $ 600 to $ 2,000, which the markets regarded as a negative moment, then it is logical why the pound is rising again, and the dollar is declining.
At the end of 2020, the wave pattern and the mood of the markets remain unchanged. The British currency is likely to break through the highs of the previous two waves today or tomorrow before the New Year, which will lead to an even greater complication of the upward trend section. At the same time, markets are still unwilling or unable to find a reason to buy the dollar, since its unrestrained decline is very hard to stop. Thus, this situation can persist for a long time. In this case, we can expect the wave pattern to simply become more complex and lengthen.
General conclusions and recommendations:
The pound/dollar instrument has presumably started building a new downward trend section. Thus, I currently recommend selling it for each MACD "sell" signal with targets located around 32nd and 31st figures, within the expected first (global) wave of a new downward trend section. A successful attempt to break the high of wave 5-5 will indicate trader's readiness to buy the pound, which will cancel the option of building a new downward trend.