GBPUSD Trying To Form A Bearish Reversal At 1.5600

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GBPUSD has been trading nicely higher since last week when we have turned bullish after the break through the upper side of a corrective channel that put wave C) in action.

This wave C) could be a final leg of a double zig-zag from March low. If that is the case then the top could be near, around the current 1.5550/1.5600 area, especially if we also consider a divergence on Money Flow Index which shows lower volume in this latest leg higher.

An impulsive sell-off from current levels and back beneath 1.5200 would be strong evidence of a completed uptrend. In such case we will focus on new sell-off towards March swing low.

GBP USD Elliott Wave Analysis top reversal May 2 2013

Well on the hourly chart we can count completed five waves up in wave C that shows signs of a top around 1.5606 because of ending diagonal in wave 5, divergence on the RSI and now also accelerating price action below the trading channel which suggests that pair is in early stage of a minor wave (iii). Further weakness towards 1.5450 (typcial thrid wave tartget) and daily close below that level would be a strong and very important sign for further GBPUSD top.

GBP USD Elliott Wave Analysis top reversal May 2 2013 second look

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For more detailed analysis on GBPUSD please check our video from April 29th 2013.

VIDEO April 29 2013

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About Author

Grega Horvat
Grega is based in Slovenia and has been involved in markets since 2003. He is the owner of www.ew-forecast.com, 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 www.ew-forecast.com 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.
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