GBPUSD - Triple correction on the way

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GBPUSD is moving in a positive direction by forming higher highs and higher lows which is a positive sign. In this entire rally from March 2013 to August 2014, prices have not breached its previous pivot low. Recently after making a high of 1.7190 which was 7 year high prices in July 2014 started eroding all the gains and moved below 1.6800 levels. The immediate pivot low is placed at 1.6698 levels which will play a crucial support for this pair. RSI is also in oversold zone and it is exhibiting positive divergence which indicates that the downtrend is exhausting and one should now be cautiously negative.

From wave perspective, prices are moving in a triple correction pattern, which means there will be two wave x in between 3 corrective patterns (a-b-c-x-a-b-c-x-a-b-c). Prices ended its first correction in December 2013 and then it formed wave x at 1.5854 levels, then it moved up and completed second correction when wave c was in an ending diagonal pattern. Currently it is moving lower in the form of wave x which can terminate soon and will start the third correction.


In short, the bias for GBPUSD remains positive as it can move up to test 1.6900 levels or even higher for short term. For medium to long term, the trend looks firmly bullish.




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