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GBPUSD: correction within downtrend

GBPUSD is turning up sharply from 1.3830, clearly with an impulsive price action visible on the lower time frame charts, suggesting that an extended five waves down from 1.5507 completed the black wave III. We know that after every impulse the market makes a three wave retracement, so we think that the corrective wave IV bounce is now unfolding back to the termination point of a former wave 4, at 1.4667 where we also see 38.2% Fibonacci retracement level, as well as low of 2015. Therefore, this region makes it a very interesting resistance from where we would expect a new turn to the downside.

GBPUSD, Daily

gbpusd d

On the lower time frame, a very strong recovery last week on cable from 1.3839 and weekly close at the high of that move suggests that the pair is likely to recover even more. In fact, leg up from 1.3839 is in five waves so this leg 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 the price will rally even back to the 1.4500-1.4600 area after wave B pullback is finished, which could go underway soon.

GBPUSD, 4H

gbpusd 4

Gregor Horvat

Gregor Horvat

Grega Horvat Grega is based in Slovenia and has been involved in markets since 2003. He is the owner of Ew-Forecast, but before that he was working for Capital Forex Group and TheLFB.com. His feature articles have been published on FXstreet.com, Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu, Insidefutures.com, etc. He recently won the award on FXStreet.com for Best Forex Analysis in 2016. At Ew-forecast he helps clients and educates them about the Elliott wave principle and how to label and track unfolding patterns in real time. His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets such as candlestick patterns, MA, technical indicators etc. His specialty, however, is Elliott Wave Theory which could be very helpful especially if you know how to use it in combination with other tools/indicators. EW-Forecast To be involved in the market effectively, you need the right guidance and resources, and our team can help you to achieve that. Our team is providing advanced informations about Elliott Wave theory in real time. The Elliott Wave Principle gives you a method for identifying the behavior of the markets and at what points the market is most likely to turn. We help new traders who are interested in Elliott Wave theory to understand it correctly. We are doing our best to explain our views as simple as possible with educational goal, because knowledge itself is power!