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Technical analysis

GBPUSD Elliott Wave Analysis: Sterling Stabilizes After Bullish Opening Gap

Sanmi Adeagbo | Nov. 5, 2018
GBPUSD Elliott Wave Analysis: Sterling Stabilizes After Bullish Opening Gap

Pound Sterling is stabilizing slightly below 1.3000 handle after a 60 Pips bullish gap at today's market opening. Brexit headlines keep coming with no deal done yet. The UK services PMI expectation was slightly missed.

October 2018 | AtoZMarkets GBP pairs opened this week with a big bullish gap. GBPUSD which closed last week around 1.2960 gaped upside to 1.3020 (60 Pips). Despite no Brexit deal is done yet, market still responds to Brexit headlines. Brexit talks still pose the biggest risk on the Sterling and will continue so, until March next year. Aside Brexit, the ongoing US-China trade deal which seems to have been re-opened and tomorrow's congressional elections in the US are also major risk concerns. The UK services PMI which was just released at the time of writing came worse than expected. At 52.2, it came just at 1.2 less than the consensus 53.4. Despite the missed figure, GBPUSD only dropped a bit below and now stabilizing around 1.3000 handle. Will the Cable drop further?

GBPUSD Elliott Wave Analysis and Important Price levels

Last week rally started at 1.27 which was 40 pips away from 1.266 support. A price pattern completed and price broke above the falling bearish channel after positive news headlines concerning Brexit hopped in. From positive budget tones to optimistic Brexit headlines, Sterling has risen strongly undeterred by the positive US employment data. GBPUSD broke above 1.292 important resistance level and spiked above 1.3000 handle. In the last update, after the successful bullish breakout, it was expected that price would make a 3-wave bullish correction to 1.2980-1.3050. What next after price hit this price zone?

The chart above shows a fast rally from 1.27 to 1.3040 which all happened last week. From 1.27, a bullish impulse wave is emerging or probably has completed. Preferably, price might be in the process of completing the 4th wave of this wave degree. A further dip to 1.292 important level might happen before price resumes upside. The next upside target is 1.3100. Alternatively, if the impulse wave has completed at 1.3040, the current drop might go deeper to 1.2828-1.285 before resuming upside.

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Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.