GBP/USD Price Analysis: GBP weaker across the board, focus on downside

The price of sterling had hit a weekly high 1.4242 with a very firm rejection, putting in a large reversal after 5 waves of the uptrend. 

Given the risk-off tone, gauging by the currency heat map which has the lower yielders, such as the Swissy, yen and safe haven USD all taking the lead, sterling is unlikely to fare well in such an environment. 

The following is a top-down analysis that illustrates where the next opportunity could come in next.

Weekly chart

Daily chart

The daily chart illustrates the strong rejection on the 6th wave which is common after a 5 wave series in either an up or downtrend. 

The price action has left a huge wick on the weekly chart deep in supply territory. A scenario forecasted in prior analysis:

Prior analysis, monthly chart

After such a strong bullish run and meeting what would be expected to be tough resistance, the focus should be on the downside. 

Live markets, daily chart

With a focus now on the downside, the lower time frames can be monitored for bearish conditions. 

First of all, the price has met the 78.6% Fibonacci of the last leg of the 5-wave bull trend. This is a firm area of support and until it is broken, there is still the possibility of an upside continuation, if not a period of sideways consolidation. 

However, a break of support will open up prospects of a run back to test old weekly resistance that has a confluence with the 61.8% Fibonacci retracement and the 10-week EMA at 1.3745.