The wave structure of GBP/USD continues to indicate the formation of an upward trend, but over the past few weeks, it has taken on a complex and ambiguous shape. The pound has fallen too sharply, making the trend segment that began on August 1 look uncertain.

The first thing that comes to mind is the complication of the presumed wave 4, which may take the form of a three-wave structure, with each sub-wave containing its own corrective formation. In this case, we can expect the pair to decline toward the 1.31 and 1.30 levels.

The downward wave structure that began on September 17 appears to be forming a five-wave pattern, though theoretically, it could develop into something longer and more complex. Personally, I am expecting a rise in quotes regardless of the specific wave count. In my view, the news background still favors growth in the pair. However, in recent weeks, buyers have shown no initiative, even though they have received regular fundamental support.

At this point, much in the currency market depends on the policies of Donald Trump. The overall news backdrop remains unfavorable for the dollar. I see the current pause in the dollar's decline as exactly that — a pause. For both major pairs, a-b-c-d-e corrective formations are currently developing, forming corrections within corrections.

The GBP/USD rate fell by another few dozen points on Friday, which no longer makes much difference. Over the past week, the pound has lost about 200 basis points, and for October as a whole — 320.

Try to quickly list the reasons why the market was so eager to dump the pound this week: Rachel Reeves' speech? What did the UK Chancellor actually say? That she intends to restore ties with the EU lost after Brexit? The Federal Reserve meeting, where rates were cut for the second consecutive time Since when does the market respond to dovish Fed decisions with bullish actions for the dollar?

There were no significant economic reports in either the UK or the US this week. Trump's trade deal with China? That's not a deal — just another temporary truce, of which we've seen several this year already.

In short, something strange seems to be happening in the currency market.

Naturally, I expect the corrective a-b-c-d-e pattern to complete soon, as I still see no serious reasons to buy the dollar or sell the pound. Wave 4 has taken on a lengthy but acceptable three-wave form, each sub-wave containing its own corrective structure. However, I cannot identify any impulsive trend sections in recent months. Therefore, the current decline of the pair is purely corrective. If this assumption is correct, the upward trend should resume once the correction is complete.

General Conclusions

The wave picture for GBP/USD has evolved. We are still dealing with an upward, impulsive trend segment, but its internal wave structure has become more complex. Wave 4 is forming as a three-wave pattern, significantly longer than wave 2. The latest downward correction appears close to completion, although it may extend further. I continue to expect the main wave structure to resume upward, with initial targets near the 1.38 and 1.40 levels. For now, however, the market remains in correction mode.

The larger-scale wave count looks nearly ideal, even though wave 4 has exceeded the top of wave 1. But remember — perfect wave patterns exist only in textbooks. In practice, things are much more complex. At the moment, I see no reason to consider alternative scenarios to the overall bullish trend.

Key Principles of My Analysis

1. Wave structures should be simple and clear. Complex patterns are difficult to trade and often change mid-formation.
2. If you're unsure about what's happening in the market, it's better to stay out.
3. There is never 100% certainty about price direction. Always use Stop-Loss orders.
4. Wave analysis can be combined with other analytical methods and trading strategies.