GBPUSD : Recovery Within Downtrend
GBPUSD is turning up sharply from 1.3830, clearly with an impulsive price action visible on the lower time frame charts which suggests that an extended five waves down from 1.5507 completed black wave III. We know that after every impulse market will make a three wave retracement, so we think that corrective wave IV bounce is now unfolding back to the termination point of a former wave, at 1.4667 where we also see 38.2% Fibonacci retracement level, as well as low of 2015, so this region makes it as a very interesting resistance from where we would expect a new turn to the downside.
On the lower time frame, a very strong recovery last week on cable from 1.3839 suggests that pair is likely to recover even more. In fact, leg up from 1.3839 is in five waves so it must be part of a bigger recovery. We are talking about black wave IV that will ideally be made by a zigzag pattern. If we are correct, then price will rally even back to 1.4500-1.4600 area after wave B pullback is finished, which could go underway soon. Ideal supports for a pullback are at 1.4130 followed by 1.4031.
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