The Cable has returned upside. Will the price break above the 1.3 handle? The following analysis includes the GBPUSD Elliott wave analysis.
November 28, 2019 | AtoZ Markets – Pound Sterling is gaining across the board after overcoming the Monday and Tuesday declines. GBPUSD is close to breaking away from the 230-pips range it embarked on since the drop from 1.3017 in early October. The price has therefore completed a triangle pattern. If a bullish breakout happens, GBPUSD should hit above 1.3 toward 1.32 and maybe higher. On Wednesday, the currency pair gained 1% to hit above 1.29. The market stays steady around 1.294 on Thursday awaiting for the next trigger.
The Brexit remains the major concern for GBP traders. It has been the primary risk and volatility driver since the plan to negotiate an exit with the EU started. Meanwhile, Brexit is at an advanced stage but now on hold until after the December election. The market seems to support a Conservative victory in the poll. This is because the market is already adjusted to the PM Boris Brexit model. A change in leadership will create some uncertainties. The Monday-Tuesday decline came as a result of the Labour party playing catch-up in the polls. However, on Wednesday, the market returned upside after a polling model predicted that Boris Johnson is heading for a comfortable majority win.
GBPUSD Elliott wave analysis
Technically, the market is in a bullish trend. The dip from 1.3017 doesn’t look like a signal for a change of trend. It’s clearly corrective. From our recent GBPUSD Elliott wave analysis, we identified a bullish impulse wave emerging from 1.197. The corrective dip from 1.3017 is the 4th wave. In the last update as the chart below shows, this 4th wave was emerging into a triangle pattern (Charting tools from TradingView).
The triangle 4th wave ended at 1.282. We expected the level to hold. We had an alternative outlook that supported a double zigzag 4th wave completing instead of the price breaking below 1.28. Eventually, the Monday and Tuesday dip ended at 1.283 and was followed on Wednesday by a bullish swing above 1.29. As the new chart below shows, the analysis is still very much valid. Let’s look at what could happen next.
The chart above shows that the alternative double zigzag pattern for wave (iv) could still happen with a bearish swing to 1.275 unless a break above the triangle b-d resistance line happens. Therefore, a break above 1.298 will show that wave (iv) has ended with a triangle pattern. The Cable could then extend gains toward the 1.32-1.33 target zone.