GBPUSD might be preparing to produce a corrective drop towards 1.2000 levels over the short term. The currency pair seems to have carved a meaningful top around 1.3170 levels as bears remain poised to take control from here.
GBPUSD probable wave counts are as follows: A meaningful bottom might be in place at 1.1414 lows in March 2020. The rally since then might have completed 5 waves through 1.2800/13 levels, carving an impulse wave.
As discussed earlier, an impulse wave is normally followed by a corrective wave in the opposite direction. GBPUSD might be unfolding as an expanded flat A-B-C lower towards 1.2000 at least before resuming rally towards much higher levels.
If the above proposed wave structure holds true, GBPUSD will stay below 1.3170 and proceed lower towards 1.2000 at least, before rallying towards 1.4300 and 1.4500 respectively. Going further, the drop from 1.2800 through 1.2250 could be Wave A.
The subsequent rally towards 1.3170 mark could be labelled as Wave B. In an expanded flat, Wave B travels beyond the price extreme of Wave A. If the above counts hold well, GBPUSD could be setting up for a meaningful bearish reversal as Wave C unfolds.
Most traders might be preparing to initiate fresh short positions around current price action (1.3100), with protective stop towards 1.3200 and projected target as 1.2000 levels respectively. Only a break above 1.3170 would delay matters.
Technical Analysis Team
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