The British Pound declines on Wednesday after the parliament’s votes on Brexit. The following GBPUSD Elliott wave analysis October 23 update looks at what could happen next.
October 23, 2019 | AtoZ Markets – GBPUSD bulls lost as 1.3 offered resistance despite the buoyant run it has had so far in October. The Brexit remains the major risk concern for investors and traders. After the EU and UK PM Boris agreed on a deal last week, the next hurdle was the parliament. The market stabilized at 1.3 and eventually dropped below 1.29 after the MPs rejected Boris’ fast track approach to Brexit. The Cable will most likely dip a bit further. However, the overall market mood is still bullish while the long term trend remains bearish.
The Parliament approved Brexit but the October 31 departure date the PM proposed was deemed too early and therefore rejected. The market, therefore, still looks vulnerable and uncertainty pertaining to the next step weighs lightly on the Pound. If there is an extension to the October 31 deadline, GBPUSD price will most likely drop faster. On the other hand, the USD is recovering slightly from the last week slump. The US-China trade deal is still in an upbeat mood. The stock market and other ‘risk-on’ assets are beginning to climb gradually. There are no high-impact fundamental data this week. Therefore, GBPUSD is expected to react to geopolitical headlines and the overwhelming market sentiment.
GBPUSD Elliott wave analysis October 23 update
From a technical perspective, the GBPUSD price is open to bearish possibilities. The rally from 1.196 to 1.3 looks a bit corrective. However, the price spilling out of the channel indicates that the bullish run from 1.196 might also continue especially if 1.28 handle supports the current dip. In the last update, we used the chart below.
An ending diagonal just as the top of the channel completed. However, there was no confirmation (a break below 1.275 and back into the channel) and the price continued upside to retest the 1.3 handle. The chart below shows the GBPUSD Elliott wave analysis October 23 update.
If the rally from 1.196 to 1.3 is a zigzag pattern, a swift decline below 1.22 should happen. However, speculative swing sellers should wait for a decline to 1.25 or its neighbourhood followed by a pullback and then look to short from the next swing. On the other hand, the current dip might be supported by 1.28. Speculative buyers should look for a position if the price breaks above the minor falling channel and ride to 1.34 and 1.35.