November 21, 2018 | AtoZ Markets
Pound Sterling is turning below 1.28 after the week’s bullish recovery looks to lack a good momentum. The following give technical insights based on Elliott wave theory.
The rally from 1.272 looks corrective and couldn’t hit 1.29 yesterday. Resisted at 1.2885, price has now dropped back below 1.28. If the Brexit-induced bearish move from 1.3070 continues, the current bearish move could extend to 1.266 or below. Later today, UK prime minister Theresa will meet with EU officials to finalize a Brexit deal in time for Sunday’s summit of EU leaders.
From a technical perspective, GBPUSD has a propensity to fall further. On the chart, price is repeating the 12-14 November corrective pattern that precede the 350 Pips dip to 1.2725. The rally from 1.2725 looks corrective and price would most likely falter more. The chart below shows the emergence of a leading diagonal pattern.
GBPUSD Elliott Wave Analysis and Important Price Levels
Since the drop to 1.2828, price is now coming out to complete a leading diagonal pattern. The rejection at 1.2828 means the 4th wave of the diagonal pattern could be followed by further dip. If price moves as expected, we should see further fall to 1.266-1.260 price zone. The diagonal would be invalid if the bearish run continues below 1.2530. A bullish bounce at 1.266-1.260 is expected. Unless a fast rally happens above 1.2885, the forecast above will most likely happen.
Please share your thoughts with us in the comment box below.