GBP is the strongest this week, now again breaking to a new high against the USD, so the market participants are becoming increasingly bullish on this currency, but from a technical perspective we believe they should be very careful. The reason is an EW structure which shows that the market went out of a triangle this week, therefore it’s in the final stages of a higher degree structure so the upside can be limited, especially if we also consider that we can count five sub-waves up in wave 5 of 3). We see some nice Fib. resistance near 1.2950-1.2300. A reversal into a new correction can be seen from the highlighted area.
On the EURUSD pair, the situation is not as clear since the market turned down in three waves from the highs and as market is trapped between 1.0930 and 1.0850 it’s unclear if the decline was a correction or a start of a bearish movement that will fill the gap. Therefore, we suggest being careful here until we get one of the clear breakouts; a move above 1.0930 can bring 1.1000 psycho level while a decline with a daily close below 1.0850 can cause a gap-fill.
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