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Analysis of GBP/USD for December 23. UK reports more than 100K new virus cases

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According to the wave analysis of the pound/dollar pair, we see that wave D started its formation. The current rise in the pair could be considered the first wave of a new upward section of the trend. Thus, inside this wave, we can see three waves. If it is wave D, the British pound is likely to stop gaining in value. If it is not, the pound sterling may continue climbing to targets located near patterns 36 and 38. If the price successfully breaks the 50.0% Fibonacci levels, this will prove that traders are ready to go on buying the asset. Notably, in any moment, the downward part of the trend may become even more complicated.

A new coronavirus wave has swept over the UK.

On Thursday, the pound/dollar pair advanced by another 100 pips. In the last four days, the asset has gained 250 pips. Taking into account that the news flow was rather weak, the reasons for the rise are not strong. It is quite possible that there is an upward wave in the structure of the downward trend. Although the pound sterling continues gaining in value, news about the UK epidemiological situation is rather gloomy. The number of new virus cases is rising almost every day. On Wednesday, December 22, for the first time since the beginning of the pandemic, more than 100,000 cases were recorded in one day. In addition, 140 people died. Although almost 90% of the country’s population received at least one dose of the vaccine and 82% received both doses, we see such figures at the end of 2021.

A government group of scientists announced that by the end of the month, the number of infections could jump to 600,000 per day. Doctors believe that the government should immediately take measures to stop the virus spread. It is also reported that vaccination will not be able to stop the increase in the number of new cases. Those who received two or three doses may catch the virus. Notably, vaccinated people do not suffer as those who refused to receive their doses. However, the number of vaccinated people does not affect the pace of the Omicron spread in any way. If scientists are right and the country sees 600,000 a day, it will mean that within a month the entire population of the United Kingdom may catch the new strain. It is hard to imagine what consequences the UK may face if these predictions come true.

Conclusion

Wave e might have completed its formation. That is why I recommend buying the asset with the targets near 1.3457, that is the 50.0% Fibonacci level. Even if wave D is under formation, the pound/dollar is able to hit the level of 1.3457. If the price breaks the mentioned level, the next target could be located at 1.3641.

Bigger time frame

Since January 6, the downward trend section has been under formation. This wave could be of almost any size and length. Wave C may complete soon. However, the entire downward section of the trend may become longer and take the five-wave form of A-B-C-D-E.

The material has been provided by InstaForex Company – www.instaforex.com

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