The Cable has dropped massively since yesterday. What should we expect next? The following 18 July GBPUSD Elliott wave analysis gives technical insights based on Elliott wave theory.
After the BOE governor’s speech yesterday, the Cable dropped with a weak Dollar. The decline continued today after a negative CPI data. Price has now dipped below the 1.3050 important support level which suggests lower prices could be seen. In the last update, we expected price to rally above 1.3365 to confirm the bullish continuation pattern, after a brief decline. But price dipped below 1.31 and eventually 1.3050 instead. The chart below was used in the last update.
Price dropped more than 50 Pips yesterday before a slight rally into the Asian session. We might see a little more dip but price should be contained above 1.31 to maintain the bullish scenario. A break below 1.31 would get price off the bullish hook and set it downside below 1.3050. On the upside, a break above 1.3295 should set price above 1.3365 and much higher up to 1.35.
18 July GBPUSD Elliott wave analysis: what next?
The chart above shows the possibility of price completing an expanding diagonal pattern. This is as viable as the normal diagonal pattern. Price could be supported at 1.2950 and bounce upside at the end of this pattern. A strong rally to 1.3365 and 1.3477 will be seen once price breaks above it. The minimum should be a rally to 1.31-1.32. Conversely, if price drops swiftly below 1.2950, the bullish expectation would be invalidated. Stay tuned for the next update.
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