Bottom line: GBPUSD overall bullish structure remains very much intact until prices stay above 1.2900 levels. Furthermore, after almost 8 weeks, the corrective drop might be complete or near to complete at 1.2877.
Technical Analysis:
GBPUSD bulls might be preparing to come back strong and resume higher, after printing below 1.2900 levels last Friday. This was expected and discussed earlier that an A-B-C corrective wave should print below 1.2900 to complete the structure. Please note that a minimum requirement is now complete but GBPUSD could drop further towards the 1.2550/1.2750 support zone as well, before resuming its rally. According to the guidelines Wave (2) most likely terminates around the vicinity of a wave 4 of one lesser degree. With prices near to 1.2830 lows, the minimum expectations are been met. The overall structure now represents a classic 5-3 Elliott Wave pattern and another 5 wave rally should the next probable structure. Traders might be willing to initiate long positions between current price and 1.2550 levels, with protective stops below 1.1950 and potential targets around 1.4200 and 1.4500 respectively. As discussed earlier, please note that 1.2550 is accompanied by fibonacci 0.619 retracement of previous rally and the past resistance turned support zone as well. It looks unlikely for another 300 pips drop as most major currencies are ready to rally against the US Dollar. An ideal expectation could be around the 1.2800 mark, but if prices drop lower it should be considered as better opportunities looking into the risk-reward ratio. The larger degree wave structure remains extremely encouraging for bulls with Waves (1) and (2) in place at 1.3515 and 1.2877 respectively. If the above wave counts are correct, a sharp rally could be witnessed from current levels, and projected towards 1.4200/1.4500 respectively. Bulls preparing for the next big move from close to current price action.
Prepared by
Harsh Japee, Technical Analyst.
GBPUSD Chart
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