GBPUSD hits weekly low as a result of negative PMI data. Meanwhile, the conservatives maintain early leads in the UK election polls. The following also includes technical analysis.
November 22, 2019 | AtoZ Markets – After a minor recovery in the Asian session, the Cable resumed the sell-off that started on Thursday. The UK’s latest PMI (manufacturing and services) data came worse than expected and the market thus reacted with a fast fall to 1.2865. This is the lowest the Sterling has gone since the beginning of this week. Barring a quick surge, GBPUSD price is set for a net loss this week after it broke below the intraday critical level at 1.29.
GBPUSD hits weekly low. What’s the latest on Brexit?
By far, the Brexit remains the biggest mover of GBPUSD and other GBP pairs. The two parties have launched their manifestos which are mostly Brexit-centered. The opposition Labour party has decided to allow free movements into the UK without limits. The party believes it has a package that will be more appealing to the EU than Johnson’s. While all the campaigns proceed, GBP traders have been a bit cautious. As a result, GBPUSD remains within the 1.3-1.277 range for four weeks. While the Conservatives still lead the poll by a small margin, Labour continues to fight to close the gap. With the break below 1.29, GBPUSD should continue within the range for the rest of the week.
GBPUSD Elliott wave analysis: is a triangle pattern emerging?
Technically, a bullish impulse wave pattern started at 1.196 and the price has projected upwards. Since it peaked at 1.3015, the price has gone corrective which has been identified as the 4th wave of the impulse wave rally. In the last update, we expected 1.29 to hold as a support level for the price to continue within the rising channel of the developing impulse wave pattern. We used the chart below in the last update (The charting tools below are from TradingView).
Wave (iv) ended at 1.277. The price bounced off 1.29 as expected but couldn’t break above 1.298 before the current dip. The recent price behaviour suggests wave (iv) has probably not yet ended. Therefore the chart below shows some adjustments in the wave count and channel positioning.
Wave (iv) could be a triangle pattern as the chart above shows. We have identified 1.284 as the support level for wave e of (iv). If we draw a channel from of waves (i)-(iii) (1.2582-1.3017) from (ii) (1.22), we will have channel support for wave (iv) at 1.285. Wave e might end from the current level up to prices above 1.276. However, 1.284 is the pivot support level. If the price bounces around 1.284 and hit the top of the b-d support line, we could count on a breakout reaching 1.317 and 1.342 bullish target levels. On the other hand, a break below 1.276 will invalidate this setup and we will have to take a new look.
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