Pound Sterling is being heavily driven by Brexit headlines. The 2-day EU summit started today. What next? The following GBPUSD Elliott wave analysis October 17 updates share some technical insights.
October 17, 2019 | AtoZ Markets – The Cable ran riot throughout last week after upbeat reports that the Brexit deal will be done. This week, GBPUSD price rose from 1.26 and almost hit 1.3 after a 400 pips surge. The EU summit started today in Brussels. Prior to the event, the EU and UK negotiators have been debating in Luxembourg to find a final resolution. However, the Northern Ireland boundary and custom issues continue to make the deal difficult.
On Thursday, the market opened with pessimistic headlines that the EU does not have the Brexit deal on its agenda. GBPUSD slipped by 50 pips to 1.275. However, a massive surge followed quickly early in the London session and the Cable almost hi 1.3. By so doing, it hit its highest price since early May. Conflicting headlines continue to distract the general market flow. However, the market continues its upbeat mood which has been the dominating sentiment since the first week of September.
GBPUSD Elliott wave analysis: H4 time frame
If we look at the GBPUSD price chart from March 2019, it’s very clear that the bearish trend is still overwhelming. The current bullish correction started on September 3 after it completed a bearish impulse wave from 1.3385. The chart below shows that the bullish correction is close to ending.
A simple zigzag corrective pattern is completing between the 61.8% and 78.6% Fibonacci retracements of the bearish impulse wave from 1.3385. The price breached the roof of the zigzag channel briefly. If it drops back inside the channel, the bears could push below 1.258. This is very much likely with the latest reports that the DUP now disagrees with Johnson’s proposal. The UK Prime Minister will bring the vote to MPs on Saturday. If he loses, GBP will drop fast and continue the long-term bearish trend.
H1 time frame
In the October 15 update, we used the chart below
The price surpassed the 1.27-1.275 resistance zone where we expected a reversal. The volatility was too big for the zone to contain. However, an ending diagonal is emerging just above the zone as the new chart below shows.
The chart above shows the GBPUSD Elliott wave analysis October 17 update. GBPUSD price is currently retracing toward 1.2875. If it returns to break below 1.275 without surging above 1.3 to invalidate the ending diagonal, sellers can look forward to some ride downside.