GBPUSD has rallied to complete a Wave B correction around 1.2690/1.2700 levels today. The currency trades close to 1.2685 as we prepare to publish the update and might be looking to resume lower from here, towards 1.2250 at least.
GBPUSD medium term potential wave counts are as follows. The single currency pair had managed to print around 1.2810 levels earlier, to terminate a potential impulse wave, which had begun from 1.1414 lows in March 2020.
As an ideal wave structure, an impulse should be followed by a corrective drop. If we look at the price action from 1.2800 through 1.2250, GBPUSD had unfolded into 5 waves, potential leading diagonal. Hence it has been labelled as Wave A, within the corrective A-B-C structure.
The subsequent rally towards 1.2700 today has unfolded into 3 waves, hence corrective in nature. It could be labelled as potential Wave B termination. Also note that Wave B has travelled up to the fibonacci 0.786 retracement of Wave A.
If the above proposed counts hold well, GBPUSD should stay below 1.2810 mark and proceed lower towards 1.2250 and further. Ideally, GBPUSD should drop towards 1.2000 to complete the above A-B-C corrective structure.
Traders might be preparing to sell around current price (1.2700), with a protective stop above 1.2810, and a proposed target below 1.2250. Only a break above 1.2810 would change the short term bearish structure.
Technical Analysis Team
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