GBPUSD might have carved a lower high around 1.2600 levels yesterday and could be preparing to turn lower again. The currency should be back in control of bears from here on, and continue lower towards 1.1900/1.2000, before resuming its rally.
The wave structure for GBPUSD is very clear and is described below. After printing a major bottom around 1.1414 mark in March, GBPUSD has remained in control of bulls. It has carved a series of higher highs and higher lows until 1.2800/10 levels.
The wave counts also indicate that GBPUSD were successful in completing 5 wave rally since 1.1414 lows. The fibonacci 0.618 extension for potential Wave 5 termination was closely met, after GBPUSD hit 1.2810 highs. The impulse was potentially complete there.
As a general guideline to the Wave Principle, an impulse is followed by a corrective wave that sub-divides into 3 waves A-B-C. GBPUSD was no different, and might have terminated Wave A and B, within the proposed A-B-C corrective structure.
The drop between 1.2800 through 1.2250 was in 5 waves, Wave A on the chart here. It also confirms that the corrective structure would be a zigzag, and terminate below 1.2250. Yesterday’s high at 1.2600 could be Wave B within the corrective phase.
A Wave C should resume lower towards 1.1900 levels, which is fibonacci 0.618 retracement of the entire rally between 1.1414 and 1.2800 respectively.
Short against 1.2800, targeting 1.1900.
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