GBPUSD has managed to pull back from its last week’s lows at 1.2675 levels. The currency had managed to push through 1.2929 highs before dropping towards 1.2850 yesterday. It remains to be seen if the counter trend rally pushes further through 1.3150/80 levels or not.
GBPUSD probable wave structure since carving 1.3500 high is as follows: The drop between 1.3500 and 1.2675 might be an impulse wave, labelled as Wave A on the chart here. If the above is correct, bulls might remain inclined to produce a counter trend rally towards 1.3150/80 levels.
Wave B might be unfolding as an expanded flat corrective structure and might terminate through 1.3000 levels in the near term. If the above structure unfolds accordingly, GBPUSD would turn lower towards 1.2200 levels to terminate Wave C, within the corrective drop A-B-C.
GBPUSD had earlier dropped to multi-year lows around 1.1414 before turning higher. The currency remained in control of bulls for the past several weeks and managed to push through 1.3500 mark early this month. Since then, bears have remained in control.
After having rallied from 1.1414 through 1.3500 mark, bears are looking inclined to produce a meaningful corrective drop towards 1.2200 levels over the next few weeks. Bulls might prepare to take control from 1.2200 mark, going forward.
Also note that fibonacci 0.618 of the above rally is seen through 1.2200 mark. High probability remains for a bullish bounce if prices manage to reach there. Traders might prepare to initiate fresh short positions around 1.3150/80 levels with protective stop above 1.3500 mark.
Technical Analysis Team
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