GBP/USD ?〽️Bearish Pressure…. But What’s Next? ?
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Dear Traders,
The GBP/USD showed renewed selling pressure last week and reinforced a potentially very bearish longer-term outlook for the Cable. What direction can we expect for the coming trading week?
This analysis will provide an update on the recent GBP/USD price-action.
GBP/USD at Major Decision Point
The Cable has indeed produced a strong bearish u-turn before reaching the January high, as was anticipated in previous posts. It is now one step closer towards validating the longer-term bearish scenario, which would see price eventually fall back down to the 2016 lows of around 1.19. But it is still very early days and uncertainties remain no doubt.
The 4-hour chart above shows two price forecasts in yellow and white lines. The white line scenario suggests that a new lower high is in place since Mar 26 and may have completed a complex sideways correction of minute wave (ii) (purple). The swing between march 1 and mar 26 is still somewhat difficult to define. The white lines scenario presumes that it is a double zigzag which would imply wave y of (ii) is complete at the mar 26 high. If this is the case, we need to see price breaking lower in the trading week ahead, or at least begin to make a series of lower highs in order to set the early stages of purple wave (iii).
The yellow line alternative highlights the possibility that the sideways correction could be a more simple expanding flat (yellow alt. a / alt. b), which requires the final upswing (since Mar 1) to be a 5-wave impulse. In this case, we are still missing a final leg to the upside and it would make the bearish move since Mar 26 a zigzag in the wave 4 position. The final upwards swing must however remain below 1.4345 (January high) in order to keep the bearish scenario valid. A likely candidate for the end of a potential final wave 5 would be the resistance at 1.4280, which price failed to reach last week.
However if price breaks 1.40 around mid-week already, immediate downside continuation becomes very likely.
All the best along your trading journey
Hubert
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