The Cable has continued the slow moves that started in the last week of October. What sideways price pattern is emerging? The following GBPUSD Elliott wave analysis November 5 update looks at the technical side.
November 06, 2019 | AtoZ Markets – GBPUSD has failed to attract much attention as investors are wary of the US-China trade deal. Doubts are still high with China making demands again ahead of the official meeting to wrap up the first phase. GBPUSD has failed to follow up the surge to 1.3 after a very impressive October. The Brexit optimism in the last month helped the Cable to climb and surge away from the bearish zone. However, the market has been quiet this week despite some encouraging political highlights from the UK.
The market has gradually dropped from 1.298 at the start of November. However, a 100-pip dip in the last 72 hours shows the dip from 1.3 is both slow and corrective. Eventually, the price might find support at the 1.27 handle and then surge higher. In the meantime, a lot of this will rest on the US and China agreeing on the first phase of their trade talks. Aside from the trade talk, Thursday’s Bank of England monetary policy reports and rate decision will offer a medium-term outlook into how investors and traders will deal with GBP. By and large, we should see the Sterling break away from the current range at the end of the week.
Technically, the medium-term trend is bullish but the long-term trend is still bearish. There is a likelihood that the rally from 1.196 to 1.3 is corrective. If this is the case, a sharp decline below 1.27 should happen. However, the current intraday dip from 1.3 looks corrective. The current dip should continue to 1.27 or its neighbourhood. If the price then bounces at 1.27-1.275 or thereabout, we should look forward to the Cable climbing above 1.3.
GBPUSD Elliott wave analysis November 6 update
In the last update, we had two scenarios. However, none of these has been validated due to low market volatility. The charts below show the GBPUSD Elliott wave analysis November 6 update. The first chart shows the rally from 1.196 has completed a zigzag pattern at 1.13 and what could follow (All charts used from TradingView)
The long-term bearish trend should continue below 1.22 and 1.196 of this scenario plays out. On an intraday degree, if the minor rally continues to 1.2930 without surpassing 1.2975, short-term traders could look for opportunities below 1.2860. The immediate target is the 1.27 handle. However, caution should be taken – if the price bounces off 1.27 and surges back to 1.28, the alternative scenario below could take place. As a result of the alternative possibility, short term sellers might have to exit. On the other hand, if the price breaks below 1.27, the next targets are 1.25 and 1.22. More conservative traders might want to wait for the bearish impulse wave breakdown toward 1.22 and then look for selling opportunities in the next pullback.
Alternatively, if the price bounces at the 1.275-1.27 support zone after completing a corrective pattern from 1.3, the surge should continue. Swing and short-term traders should first wait for a break above 1.286 at least, then a minor dip before buying the next breakout. Bullish targets are 1.3 and 1.32.