The cable is getting up gradually ahead of important events. Will price continue upside? The following 5-6 July GBPUSD Elliott wave analysis looks at the technical forecast of GBPUSD based on Elliott wave theory.
GBPUSD broke out of an important diagonal pattern earlier this week to probably lead to a big bullish correction that may last throughout this month. Since April, price has been bearish, and last week completed an impulse wave. The 5th wave diagonal pattern of this impulse wave made it even more evident that a big bullish correction was coming. Diagonals are reversal patterns. Often times when price completes a diagonal pattern, there is a correction or change of trend. In this case, a bullish correction is expected. There will be much volatility this week as the BOE statement today, FOMC later today and the NFP tomorrow will cause spikes in this currency pair at least in the short term. Our forecast still looks upside. Before we look at today’s update, let’s review the last update where we used the chart below.
Price is already making effort to break above the wave (ii)-(iv) trendline. Once the trendline is broken properly upside, the first bullish target would be the 1.3475 resistance level. The bullish correction is likely going to extend to 1.35-1.38. This forecast will be invalid if price breaks below 1.3050 which is less likely but a possibility.
5-6 July GBPUSD Elliott wave analysis: what next?
Price has broken out of the diagonal 5th wave. The rally is expected to continue as we count a bullish impulse wave (a) (Circled in red) which is the first leg of the major correction since April. This forecast will hold unless price moves fast and break below 1.3090 which will most likely lead to a break below 1.3050 support level. The three fundamental events will most likely lead to a strong move and we’ll see they add to or subtract from our forecast. Stay tuned for the next update.
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