GBPUSD started last week bearish but ended it bullish. Will the bullish correction continue this week? The following 16 July GBPUSD Elliott wave analysis gives technical insights based on Elliott wave theory.
The Cable might have completed the second leg of a bullish correction at 1.31 last week. After a bearish impulse wave that started in April ended last month at 1.3050, we expected a bullish correction. According to Elliott wave theory, such is highly likely to happen. Since the end of the impulse wave, price has started a journey upside. The most common corrective pattern in this scenario is a zigzag pattern and that might just be playing out. Price completed the second leg of what might end up as a zigzag bullish correction. In the last update where we used the chart below, we expected the rally to continue after price completed the wave (b) dip that followed the bullish wave (a) breakout of the bearish zone.
The chart above shows wave a (circled) has completed and price is making a 3-wave dip. The dip could continue to 1.31 before the bulls take over. The bullish target is now at 1.36-1.37. This forecast will be invalid if the dip goes further below 1.3050. In as much as price stays above 1.3050, there is a big likelihood that the bullish move would take over again.
16 July GBPUSD Elliott wave analysis: what next
Wave b (circled) ended at 1.31 and followed by a fast bullish move. There may be about 50-100 pips dip from the current price before price resumes upside. A fast dip below 1.31 would most likely lead to the termination of the wave forecast below 1.3050. Price is expected to rally if it stays above 1.31. A break above 1.336 should be followed by further rally to 1.35-1.36 to complete a zigzag wave c pattern. Stay tuned for the next update.
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