GBP/USD Bearish Breakout Creates Strong Momentum and Reversal

Meta description:The GBP/USD broke below the support trend line (dotted green) after bouncing at the previous top (red). Price could either be building a bearish reversal or larger retracement within the overall uptrend.

GBP/USD

4 hour

The GBP/USD broke below the support trend line (dotted green) after bouncing at the previous top (red). Price could either be building a bearish reversal or larger retracement within the overall uptrend. A bearish continuation of the correction could take price down to or close to the next support trend line (blue) whereas a bullish bounce could see price challenge the previous tops.

1 hour

The GBP/USD made a larger downside after strong bearish momentum appeared in the first leg down. The bearish breakout was even stronger and could be a potential wave 3 (purple). In that case, price is now in a wave 4 and could make one more dip for a wave 5. The alternative wave count is that price completed a bearish ABC (orange) instead and price could build an expanded correction within a WXY (red). The key level to keep an eye on are the Fibonacci retracement levels of wave 4 vs 3.

USD/JPY

4 hour

The USD/JPY is still moving up slowly within the bullish channel.Price remains at a key decision zone: a bullish breakout above the 50% Fib invalidates the bearish wave structure whereas a break below the support trend line (blue) makes a downtrend continuation within wave 5 (blue) more likely.

1 hour

The USD/JPY could be building a potential wave 2 pullback(orange). This wave pattern is invalidated once price breaks above the 100% Fib level of wave 2.