GBPUSD might be forming an interim bottom around 1.2700 mark today. The currency has already carved a meaningful top around 1.3500 levels earlier. Bears are looking poised to push through 1.2200 mark in the next several weeks before giving it to bulls.
GBPUD wave structure is quite clear after it had dropped to 1.1414 lows in March. The single currency has managed to carve a potential impulse wave from 1.1414 through 1.3500 levels respectively. If the above structure is correct, a corrective drop is under way.
The proposed corrective drop should unfold into 3 waves A-B-C and push towards 1.2200 mark going further. At the moment, GBPUSD is seen to be approaching fibonacci 0.382 retracement of the entire rally between 1.1414 and 1.3500, around 1.2700 handle.
The termination could be seen as potential Wave A within the A-B-C drop discussed above. With Wave A in place, GBPUSD bulls would remain poised to push higher towards 1.3150/1.3200 levels to terminate Wave B, before reversing lower to produce Wave C.
GBPUSD is expected to produce a corrective rally over the near term, which could push through 1.3150 at least. Thereafter, Wave C could resume lower towards 1.2200 mark which is also fibonacci 0.618 retracement of the previous rally between 1.1414 and 1.3500 respectively.
Over the next several weeks, GBPUSD could be a good candidate to be sold on rallies. Immediate resistance is intact at 1.3500 mark while interim support should be around 1.2700 levels respectively.
Short against 1.3500, target is 1.2200.