GBPUSD seems to have carved a meaningful top at 1.3482 levels for now as bears prepare to drag prices lower towards the 1.2100/1.2200 handle, over the next several weeks. The currency has dropped over 350 pips in the last few trading sessions and trades around 1.3150 for now.
GBPUSD probable wave counts are as follows: The currency has managed to produce a meticulous rally since 1.1414 lows in March 2020. It has remained in control of bulls and rallied through 1.3482 levels sub-dividing into potential A-B-C labelled here.
If the above counts are correct, we should witness at least a corrective drop towards 1.2200 before the rally resumes. Alternately, the entire rally could be seen as an impulse, which should be followed by a corrective drop at a similar degree.
High probability remains for an A-B-C drop towards 1.2100/1.2200 levels, which is also the previous Wave 4 of one lesser degree. Wave A could be in progress at the moment and could terminate around 1.3000 levels going forward, the fibonacci 0.382 retracement of entire rally.
Furthermore, the fibonacci 0.618 retracement of the entire rally between 1.1414 and 1.3482 could be seen passing through 1.2200 mark. GBPUSD bulls might be inclined to take control back if prices manage to drop towards those levels.
Traders might be inclined to hold short positions taken earlier with protective stops above 1.3500 and projected targets below 1.2200 levels respectively. Only a break above 1.3500 would change the above bearish structure.
Technical Analysis Team
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