GBPUSD might have finally hit resistance around 1.3260/70 and reversed lower. Bears are looking poised to push lower towards 1.2100 handle at least, if not further. The currency is trading around 1.3100 handle for now and might test 1.3200 resistance before turning lower again.
GBPUSD probable wave structure is as follows: The currency had print through fresh lows around 1.1414 in March. Since then it has carved a series of higher highs and higher lows through 1.3270 mark. The entire rally looks to be corrective 5-3-5 (A-B-C) structure.
GBPUSD had initially rallied from 1.1414 through 1.2800/10 levels unfolding into 5 waves, labelled as potential Wave A on the chart here. The subsequent drop through 1.2250 could be Wave B and Wave C has rallied through 1.3270 mark.
If the above proposed structure holds well, GBPUSD should stay below 1.3270 levels and reverse lower towards 1.2100 at least, sub dividing into 3 waves. Alternately, it is also possible for bears to continue below 1.1414 mark, going forward.
Also note that fibonacci 0.618 retracement of the entire rally between 1.1414 and 1.3270 is seen through 1.2140/50 mark. High probability remains for a bullish bounce if prices manage to reach there. The drop is expected to unfold in A-B-C corrective manner.
Traders might be inclined to remain short for now with potential stops above 1.3270 and projected targets through 1.2100 levels. Only a sustained break below 1.2000 handle would threaten to push through 1.1414 levels.
Technical Analysis Team
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