Sterling has continued to grind higher over the past few weeks – Initially taking out the key 1.6055/75 zone (see prior updates), followed by the 1.6125/75 area (61.8% retracement and previous 10/17 & 11/1 highs). Once breached, we saw nearly a straight line higher to test the noted 2012 highs around 1.6300/10. While GBP/USD presently remains below this these highs, we believe a further continuation could be likely over the coming sessions – Especially with daily RSI looking comfortable above the key 60/65 level.
Next potential targets/levels of resistance above 2012 highs:
- 1.6350/55 – Wave 5 is equal to wave 1
- 1.6425/30 – 78.6% retracement (drawn from April 2011 high & Jan. 2012 low)
- 1.6460/70 – Trendline resistance from 2009 high
That said, if GBP/USD were to stop and reverse back lower from present levels, it would technically satisfy the Elliot Wave 5th push higher. Furthermore, it could even be classified as a potential longer-term double and/or triple top formation.
Chart Source: Forex Charts by eSignal