GBP/USD: May Reach 1.50 or 1.35 Price Zone In Coming Weeks

As practice has shown, wave 4 can take several complex structures, such as double and triple 3s and A-B-C-D-E triangles. In GBP/USD, we can observe a complex 3-3-5 corrective pattern taking place.

GBP/USD Daily Chart – June 23, 2016

GBP/USD Daily Chart

In this daily chart, we see that GBP/USD broke above 200 Simple Moving Average (green) for the first time since December 2015 but in order for the bullish sentiment to continue, this spike above 200SMA should hold and must not break below 50EMA (blue).According to Elliott Wave Theory, GBP/USD is completing the last leg of wave 4, wave C. Since March 2016, GBP/USD has created a complex wave 4 structure where wave A has 3 inner waves, wave B has 3 inner waves, and if you go to lower timerframes, wave C is completing 5 moves up (3-3-5 corrective pattern).

GBP/USD 1H Chart – June 23, 2016

GBP/USD Hour Chart

In this 1h chart, we observe a pergence in GBP/USD moves towards 1.47, 1.48 and we expect a new high towards 1.49 to complete this euphoric move or wave C of 4.The pergence is shown between the stochastic and the price action, where last three new highs of GBP/USD has not been supported by stochastic follow-through (see x-notes in chart). A break below 20EMA and 50EMA in the hourly timeframe would suggest two possible scenarios:

  • GBP/USD is correcting its 5 moves up – 38% or 50% (1.45-1.44 price zone)
  • GBP/USD topped wave 4 and it is starting wave 5
  • A break below 200SMA in the hourly would indicate the bears are again in control and we will expect GBP/USD to finish wave 5 in the coming weeks that might target 1.38-1.35 price zone.——-

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