GBPUSD is recovering from last week BREXIT-induced fast fall. Price is now eyeing 1.3170-1.3180 congestion level. Ahead of the FOMC, what could happen next?
BREXIT headlines are still coming up as the Sterling tries to settle from the Salzburg summit which ended in harsh tones following the European union's rejection of the British government's EU exit plan. The atmosphere created was bad for the Sterling as it dropped quickly, loosing 200 Pips in the process. There has been good recoveries this week. Price is back to 1.3150 as the optimistic comment from the Brexit secretary, Dominic Raab, of getting the BREXIT deal done, has caused a resurgence. Will the Sterling remain upside? All focus will be on the FED decision tomorrow but the BREXIT still pose the biggest risk on the near-term future of the Sterling.
GBPUSD - Technical Overview and Important price levels
In yesterday's technical updates, we looked at the short and long term forecast of GBPUSD - both pointing downside. On the short-term, there was an emerging impulse wave with the 4th wave in motion. The chart below was used.
Price is currently rallying from 1.3050 and is expected to continue to 1.3140. The drop from 1.33 is making a bearish impulse wave which might confirm the end of the 38.2% long term Fib-correction discussed earlier. At the intraday level, price might be resisted at 1.3140 and its neighborhood to complete an intraday wave iv. A drop would be expected afterwards to 1.3 before a bigger bullish correction. In as much as price stays below 1.33, the bearish trend is much likely to continue.
Since the update above, price has rallied to 1.3165, dropped below 1.31 and now at 1.3150. The bullish recovery looks corrective thereby making a good case for more bearish move. Here is the new update.
The drop from 1.33 to 1.3050 could have completed a bearish impulse wave following a larger degree bullish correction ending at 1.33. The current rally from 1.3050 is the wave ii) correction of the bearish 1.33-1.3050 dip. The rally could continue to 1.32 before price continues downside. The bearish commitment will be confirmed if price breaks below the wave a-b-c rising channel. The next bearish price target is 1.29. 1.33 is expected to hold as the important resistance level.
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