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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.


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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.


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