Bottom line: GBPUSD bullish structure is intact until prices stay above the 1.1950 lows. The corrective drop from 1.3515 levels looks complete after prices dropped to 1.2256 lows on March 13, 2020.
Technical Analysis:
GBPUSD bulls remain in control in the long term while prices stay above 1.1950 levels. The counter trend drop which was expected since 1.3515 levels earlier seems to have finally completed last week after GBPUSD managed to touch 1.2256 lows. Please note the following convergences seen around the 1.2250 levels: 1. the fibonacci 0.786 retracement of entire rally between 1.1950 and 1.3515 is see around 1.2300 levels. 2. Backside of the resistance turned support trend line since April 2018 is passing through the above zone. GBPUSD has tested the backside of the above trend line and bounced back producing a potential reversal. Keeping the above convergence in mind, it remains quite possible for a low in place at 1.2256, and that bulls should remain poised to push higher towards 1.4200 levels going forward. Looking into the wave structure and counts since 1.1950 levels, the GBPUSD had staged a 5 wave rally towards 1.3515 levels, labelled as Wave 1. Furthermore, a corrective drop (possibly a combination) could be complete at 1.2256 levels, labelled as Wave 2. If the above wave counts are correct, GBPUSD should be preparing to produce a sharp Wave 3 rally towards 1.4200 levels in the next few trading months. Most traders might be willing to initiate fresh long positions around the current price action (1.2350), with protective stop at 1.1950 and projected targets above 1.4200 levels respectively. Please note that Sterling might be preparing to produce a rally that could last for the next few months since prices have broken into the buy zone of a 2 year trend line resistance.
Prepared by
Harsh Japee, Technical Analyst.
GBPUSD Chart
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