Bottom line: GBPUSD is nearing a major bottom around 1.1200/1.1400 mark that could last for the next several months. Bears might have carved a bottom around the 1.1450 mark.
Technical Analysis:
GBPUSD has been into focus since 1.1950 lows and having produced a 5 wave rally towards 1.3515 levels. The drop from 1.3515 levels has proved that the counts were misjudged since the impulse rally was just a part of an expanded flat wave structure. Today, we bring up a weekly chart setup that might be near to completing a diagonal structure at a larger degree. Looking at the larger degree wave counts since the 2.1161 highs, Sterling might have produced as an ending diagonal wave structure. A diagonal consists of 5 waves and each wave sub divided into 3 (labelled as a-b-c) here. If the above counts are correct, Wave 5 is under way and it has completed minimum requirements already by dropping below Wave 3 low at 1.2089 levels. Please note that Wave 5 probably began from 1.4377 levels and seems to have unfolded into a-b-c, where wave b was an expanded flat. The rally seen between 1.1950 and 1.3515 could be the last leg within the expanded flat. As stated earlier, corrective waves take several forms and can be identified once they are behind us. Furthermore, expanded flats are a trader’s nightmare if missed on the impulse wave. Nonetheless after having missed on the previous one, we present a high probability count below. Looks like Wave 5 of the proposed ending diagonal structure is complete at 1.1457 or could complete close to 1.1200 levels. Most traders might be willing to initiate fresh long positions between 1.1200/1.1400 levels with stop just below the swing low and short term projected target above 1.4300 respectively.
Prepared by
Harsh Japee, Technical Analyst.
GBPUSD Chart
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