GBPUSD appears to be trading in a bullish impulse wave after making lows in July. The extended wave-3 of the 5-wave impulse reached a high of around 1.6260 on the first of October and today’s high falls short of the October high by just a few pips. This suggests one of two scenarios:
- If GBPUSD fails to extend above the top of wave-3 and falls below the bottom of wave-4, then the 5th wave is truncated and points to the potential for a sharp correction to the downside.
- If the bottom of wave-4 holds as support, the wave-5 is likely to extend beyond the top of wave-3 before correcting.
The bottom of wave-4 is around the 23.6% Fibonacci retracement of the impulse and was channel support at the time GBPUSD turned higher to begin wave-5. More immediate support may be found around the 1.6075/90 area which is where the daily Tenkan and Kijun lines converge with the 21-day simple moving average (SMA). If the pair falls through this support, the 23.6% Fibonacci level comes into view.
A rebound brings into focus the 1.6260 zone, which is a key hurdle to the upside for GBPUSD as it appears to have formed a double top in the area. Additionally, the daily RSI is faced with a falling resistance line and the indicator was recently rejected from the trend line, a signal that a move higher may be challenging for GBPUSD. Despite signals of potential weakness, we maintain a bullish bias in GBPUSD while the pair trades within the bullish channel and while central bank policy remains supportive ( see BOE minutes: GBPUSD could be picked up on the dips).
Source: eSignal and FOREX.com
Recommended Content
Editors’ Picks
EUR/USD advances to near 1.0750 as risk appetite regains balance
EUR/USD extends its winning streak for the third successful day, trading around 1.0730 during the Asian session on Friday. The risk-sensitive currencies like the Euro gain ground as risk appetite regains balance ahead of US Nonfarm Payrolls.
GBP/USD advances to 1.2550, all eyes on US NFP data
The GBP/USD pair trades on a stronger note around 1.2540 amid the softer US Dollar on Friday. The US Federal Reserve Chair Jerome Powell delivered a modest dovish message after the meeting on Wednesday, which weighs on the Greenback.
Gold lacks firm near-term direction, remains stuck in a range ahead of US NFP
Gold price struggles to gain any meaningful traction amid mixed fundamental cues. The Fed’s less hawkish outlook drags the USD to a multi-week low and lends support. Bets for a delayed Fed rate cut and a positive risk tone cap gains ahead of the US NFP.
Solana price pumps 7% as SOL-based POPCAT hits new ATH
Solana price is the biggest gainer among the crypto top 10, with nearly 10% in gains. The surge is ascribed to the growing popularity of projects launched atop the SOL blockchain, which have overtime posted remarkable success.
US NFP Forecast: Nonfarm Payrolls gains expected to cool in April
The NFP report is expected to show that the US economy added 243,000 jobs last month, sharply lower than the 303,000 job creation seen in March. The Unemployment Rate is set to stay unchanged at 3.8% in the same period.