GBP/USD Elliott Wave Analysis
|GBP/USD – 1.2759
GBP/USD – Wave 4 is unfolding as an (A)-(B)-(C) and could have ended at 1.7192
Although cable did resume recent decline and fell to as low as 1.2589, the subsequent rebound has deferred our bearishness and further consolidation above said support would be seen, however, as long as resistance at 1.2818 holds, bearishness remains for the fall from 1.3048 top to resume after initial sideways trading, below 1.2650-55 would signal the rebound from 1.2589 has ended, bring retest of this level. Once this support is penetrated, this would extend the aforesaid fall for retracement of recent upmove to 1.2550, having said that, reckon downside would be limited to 1.2500 and price should stay above 1.2440-50.
Our preferred count on the daily chart is that cable's rebound from 1.3500 (wave (A) trough) is unfolding as a wave (B) with A ended at 1.7043, followed by triangle wave B and wave C as well as wave (B) has possibly ended at 1.7192, below support at 1.4232 would add credence to this count, then further fall to 1.4000 level would follow but reckon downside would be limited to 1.3655 support and price should stay above previous support at 1.3500.
On the upside, expect recovery to be limited and as long as said resistance at 1.2818 holds, prospect of another decline remains. Above 1.2885-90 would suggest low is possibly formed, bring a stronger rebound towards resistance at 1.2978 which is likely to hold from here. Looking ahead, only a break above 1.2978 would signal the correction from 1.3048 top has ended, bring retest of tis level later. A break above there would extend recent upmove from 1.1986 low to 1.3140-50 (38.2% Fibonacci retracement of 1.5018-1.1986) and possibly 1.3200.
Recommendation: Hold short entered at 1.2800 for 1.2550 with stop above 1.2800.
For intraday and daily ideas, visit trade ideas section.
Longer term - Cable's rise from 1.0520 (Feb 1985) to 2.0100 (September 1992) is seen as [A], the decline to 1.3682 is labeled as (B) and (C) wave rally has ended at 2.1162 (9 Nov, 2007) which is also the top of larger degree wave B with circle. The selloff from there is a 5-waver with wave (A) ended at 1.3500 (23 Jan 2009), wave (B) itself is labeled as A: 1.6733, triangle wave B: 1.4813 and wave C as well as top of wave (B) ended at 1.7192 (2014), hence the selloff from there is an impulsive wave (C) with wave I : 1.4566, wave II 1.5930, an extended wave III is unfolding and already exceeded our downside target at 1.3500 and 1.3000, hence weakness to 1.2500 and possibly 1.2000 cannot be ruled out, however, price should stay well above psychological level at 1.0000.
Interested in GBP/USD technicals? Check out the key levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.