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GBPUSD is very slow and choppy above the 1.5900 level so we think that a move from the latest low is corrective one, and therefore we think that the recovery is temporary.

In fact we have labeled a decline from 1.6260 with five waves down which is evidence of a bearish price action, marked as wave (a) or (i). In both cases we expect a third leg lower once the corrective wave (b) or (ii) will complete a retracement.

Ideally this will occur somewhere between the 38.2-61.8% retracement area compared to the previous decline. In that region we also have a parallel trend line connected from the 1.6161 swing that could also react as a resistance level.

With that said traders should be aware of a bearish waves in the next few days. This view remains valid as long as price trades beneath 1.6260 high.

GBPUSD technical Elliott Wave Analysis October 16 2013 forex trading cable