Executive Summary
- GBPUSD appears ready to rally in a third of third wave
- The June 26 low is the bullish count’s key level
- Bullish targets are 1.36-1.41 unless the alternate count is activated below 1.2612
Cable Recently Completed a 5-3 Rally Pattern
Back on May 30, we forecasted that GBPUSD would reach 1.2850-1.3000 while holding above 1.2680. On June 12, Cable did reach a high of 1.2860 and has since corrected lower in wave (ii).
We are counting the five-wave rally complete at 1.2818 and subsequent three-wave setback at 1.2612. This is a completed bullish 5-3 pattern that sets the stage for a powerful rally.
What Is the Current Elliott Wave Pattern for GBPUSD?
We are considering the current Elliott wave for GBP/USD to be wave (iii) of ((iii)).
The June 26 low at 1.2612 is considered the end of wave (ii). This means since June 26, GBPUSD has been working higher in the beginning stages of wave (iii), generally one of the strongest waves in the Elliott wave sequence.
This could be a powerful wave with targets in the 1.36-1.41 zone based on conventional Elliott wave relationships and potentially higher price targets exist. However, for the time being, GBPUSD needs to prove its rally higher in wave (iii) by breaking above the resistance shelf near current prices (yellow rectangle).
This wave count is valid so long as prices hold above 1.2612. The upward sloping green trend line can act as an early warning signal that another pattern may be developing.
Bottom Line
This anticipated wave (iii) rally could carry up to 1.36-1.41 while holding above 1.2612.
If prices fall below the green trend line, then we’ll need to review and see if the rally sequence has been broken and possibly consider an alternate count. The alternate count would consider this week’s high as wave B or X and lead to a decline down to 1.2500.
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