GBP/USD poised to break out: Wave ((iii)) of 3 of (3) set to accelerate beyond channel resistance
|The current structure in GBP/USD (1D) suggests we are in the early stages of wave ((iii)) of 3 of (3) on a higher degree impulse cycle. The internal count from the wave (2) low clearly delineates wave (1)-(2), followed by wave 1-2 within wave (3), setting the stage for the heart of the move — wave ((iii)).
The price action has respected the boundaries of a well-defined ascending channel, with subwaves i and ii of ((iii)) already forming. The powerful rally off the wave ii low, breaking above minor wave i high with momentum, supports the view that wave ((iii)) is now underway.
Key observations
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Wave ((ii)) retraced deep into the previous consolidation zone but respected channel support, a classic setup for a strong wave ((iii)) extension.
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Price is pressing against the upper bound of the channel, and given the impulsive structure and wave dynamics, a channel breakout is likely imminent.
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Wave ((iii)) tends to be the most powerful segment in an impulse — we can expect increased volume, momentum, and verticality in price action as it progresses.
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Upon a confirmed breakout, wave 3 of (3) targets should align with Fibonacci extensions of the initial wave (1)-(2) move, potentially reaching above 1.3900–1.4000 in the coming weeks.
Outlook:
We anticipate a bullish breakout beyond the upper channel resistance as wave ((iii)) of 3 accelerates. Traders should look for confirmation through impulsive candles and higher highs with supporting internals on lower timeframes. Pullbacks will likely be shallow and bought quickly as the wave gains traction.
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