GBPUSD seems to have carved a meaningful top around 1.3170 mark over the last week. The currency has print lows around 1.2981 yesterday before pulling back higher again. It is seen to be trading around 1.3087 for now as bears prepare to take control.
GBPUSD had print fresh lows at 1.1414 levels earlier in March 2020. Since then, the currency pair has been under control of bulls and managed to carve a series of higher highs and higher lows through 1.2800 levels.
The rally between 1.1414 and 1.2800 levels has unfolded into 5 waves, making an impulse. As discussed earlier, an impulse rally is ideally followed by a corrective drop A-B-C in case of a flat. GBPUSD might be unfolding a corrective wave since 1.2800 mark.
Looking into the sub waves within the corrective wave. The drop between 1.2800 and 1.2250 could be Wave A. The subsequent rally from 1.2250 through 1.3170 could be labelled as Wave B. If the above counts are correct, GBPUSD should reverse lower as Wave C unfolds.
Ideally, Wave C should extend below 1.2250 lows as it is a part of an expanded flat corrective wave. The projections for Wave C to terminate are pointing towards 1.2100 levels, the previous Wave 4 termination point, as highlighted on the chart here.
Also note that 1.2100 zone is also the fibonacci 0.618 retracement between 1.1414 and 1.3170 respectively. Hence probabilities remain high for a bullish bounce, if prices manage to reach there.
Short against 1.3200, targeting 1.2100