Bottom line: GBPUSD bullish structure remains intact until prices stay above 1.1950. Furthermore, the corrective drop from 1.3515 could be complete at 1.2752.
Technical Analysis:
GBPUSD is a classic example of a 5-3 Elliott Wave pattern and it could be back in control of bulls after printing lows at 1.2752 on February 28, 2020. Looking at the medium term wave structure since 1.3515 highs, GBPUSD has been in a corrective phase. The drop from 1.3515 towards 1.2900 was an impulse, labelled as Wave A. Wave B had terminated around 1.3200/1.3280 levels drifting sideways. Minimum requirement for a Wave C termination was below 1.2900, to complete a potential zigzag. GBPUSD has gone a step further and dropped at a convergence of previous wave iv termination and Fibonacci 50% retracement of earlier rally around the 1.2750 mark. Please note that Wave C of the corrective drop might be complete at 1.2750 and a push through 1.3010 resistance would confirm the same. Furthermore, also note that GBPUSD might drop towards 1.2550 levels before completing Wave C. Numerous convergences are see through 1.2550: The Fibonacci 0.618 retracement of Wave (1), Fibonacci 1.271 extension of corrective Wave A, past resistance turned support zone. All the above are seen to be converging around 1.2550 levels. Most traders might have initiated long positions around 1.2750 levels but conservative traders might be willing to wait until 1.2550 drop, before initiating long positions against 1.1950 and projected targets above 1.4200 and 1.4500 respectively. The overall wave structure since 1.1950 lows is a classic 5-3 Elliott Wave pattern. Ideally a 5-3 pattern should produce another 5 wave movement towards the major direction which is up in this case. The rally between 1.1950 through 1.3515 was in 5 waves labelled as Wave (1). The subsequent drop has been corrective, 3 waves until now. If the above holds, GBPUSD is preparing to produce another 5 waves rally.
Prepared by
Harsh Japee, Technical Analyst.
GBPUSD Chart
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