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06.12.202304:41 Forex Analysis & Reviews: An important period for the dollar is about to start

The euro slightly declined against the dollar, while the pound did not fall at all. Nevertheless, it marks the starting point for the US dollar's 4-day swim through the waves of the statistical sea. Despite the fact that all the most important reports will be released on Friday, we have just received information that could once again disrupt the entire wave pattern. Recall that a month ago, weak non-farm payrolls and unemployment in the United States exerted pressure on the dollar, and two weeks ago, a conflicting inflation report did the same.

Exchange Rates 06.12.2023 analysis

Accordingly, the wave analysis remains unchanged, as the assumed waves 2 or b for both instruments can have a length of up to 100% of the first wave. However, we are used to observing corrective waves that do not exceed 50.0-61.8% according to Fibonacci. Any other sizes of such waves look inappropriate. As I have mentioned many times, it is best to work with waves and movements that are as clear as possible. If the wave layout is non-standard, it is better not to risk trying to predict a small wave in complex corrective structures that can become infinitely more complicated.

At present, waves 2 or b look more or less proportionate and convincing. Therefore, a downward movement should begin or continue from current positions, but the very first truly important report in America this week turned out to be disappointing, supporting the November trend. The JOLTS report for October showed 8.733 million job openings, while market expectations were 9.3 million. As we can see, the deviation from the forecast turned out to be quite significant, which caused the dollar to fall.

Unfortunately, several more important reports will be released in America this week, and if they are all as negative as in November, then there is no particular hope for the dollar. The wave analysis will not change from this, but waves 2 or b may take an even more extended form in this case. What else can the market do if the U.S. reports constantly do not meet "high standards"? The dollar can only be saved by a clear market sentiment for selling. This is possible for the euro, but doubtful for the pound.

Based on the analysis, I conclude that a bearish wave pattern is still being formed. The pair has reached the targets around the 1.0463 mark, and the fact that the pair has yet to breach this level indicates that the market is ready to build a corrective wave. It seems that the market has completed the formation of wave 2 or b, so in the near future I expect an impulsive descending wave 3 or c with a significant decline in the instrument. I still recommend selling with targets below the low of wave 1 or a. At the moment, wave 2 or b can be considered completed.

Exchange Rates 06.12.2023 analysis

The wave pattern for the GBP/USD pair suggests a decline within the downtrend. The most that we can count on is a correction. At this time, I can recommend selling the instrument with targets below the 1.2068 mark because wave 2 or b will eventually end and at any time. The longer it takes, the stronger the fall. The narrowing triangle is a harbinger to the end of the movement.

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Chin Zhao,
Analytical expert of InstaSpot
© 2007-2024
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