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05.12.2022 06:59 AM
A clear conclusion with a clear lack of any prediction being fulfilled
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It makes perfect sense to include Friday in trading textbooks. To understand how and when the market might change its direction of movement or when the movement might intensify, all traders carefully study the calendar of economic events. The core of the fundamental analysis is this. But occasionally, as they say, there are exceptions. Additionally, they took too much time this time. Remember that I have frequently questioned whether raising the euro and pound's exchange rates is necessary? The fifth e waves for both trading instruments took on an extended form and were supposed to be finished a long time ago. I have written and am currently writing about this exact subject.

Over the last two weeks, the market has had many opportunities to halt the rise in demand for the euro and the pound and create at least a corrective downward set of waves. However, the market has never seized this chance. Or decided not to. The fundamental analysis loses its meaning when the market chooses not to consider the news and trades in a single direction. Furthermore, because the market always trades in one direction, wave analysis is pointless because you can wait for specific waves to form but they never do. The drawback of waves is that they can take on almost any length. Even the current waves e have room to grow. As a result, I've been watching for a decline for the past two weeks, and during that time, the instruments have been rising.

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The market had anticipated a reading of around 200 thousand for the nonfarm payrolls report on Friday, but it came in at 263,000. The unemployment rate is 3.7% as of today. In November, wages increased by 0.6%, despite the market expecting a rise of just 0.3%. At the same time, the US dollar only briefly appreciated before falling back down. It is impossible to explain why both instruments increased on Friday night, given that the week ended at peak levels. Let me remind you once more that fundamental analysis (at least on Friday) should have led to a decline in both instruments, and wave analysis predicts the formation of a descending set of waves. But once more, neither waves nor fundamental analysis could predict the movement we saw. And all you can do is tolerate it. Now that the trend can become more complex on both ends, the waves e can as well, which will necessitate adjusting the wave markup. It's also unsettling to think about what will occur in December when all three central banks meet for the final time this year. The market's response should vary depending on the meetings attended, the decisions made, and the rhetoric used. But if you can only go in one direction, will the market still want to be so diverse? We'll likely experience several surprises in December.

I conclude that the upward trend section's construction is complete and has increased complexity to five waves. As a result, I suggest making sales with targets close to the estimated 0.9994 level, or 323.6% Fibonacci. The trend's upward portion could become more complicated and take on a longer form, and the likelihood of this happening is increasing daily.

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The construction of a new downward trend segment is predicated on the wave pattern of the pound/dollar instrument. Since the wave marking permits the current construction of a downward trend section, I cannot advise purchasing the instrument. With targets around the 1,1707 mark, or 161.8% Fibonacci, sales are now more accurate. The wave e, however, can evolve into an even longer form.

Chin Zhao,
Analytical expert of InstaForex
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