GBP/USD Elliott Wave Analysis

GBP/USD – 1.2865

 
GBP/USD – Wave 4 is unfolding as an (A)-(B)-(C) and could have ended at 1.7192

 
The British pound only slipped to as low as 1.2769 (we recommended in our previous update to buy at 1.2760 and missed our long entry) before finding renewed buying interest there and has rebounded, however, reckon upside would be limited to 1.2960-70 and resistance at 1.3015 should hold, bring further consolidation below recent high at 1.3048 ahead of UK election. Only a daily close above 1.3015 would signal pullback from 1.3048 has ended, bring retest of this level, break there would extend recent upmove from 1.1986 low to 1.3140-50 (38.2% Fibonacci retracement of 1.5018-1.1986) and possibly 1.3200, however risk from there has increased for a retreat later. 

Our preferred count on the daily chart is that cable’s rebound from 1.3500 (wave (A) trough) is unfolding as a wave (B) with A ended at 1.7043, followed by triangle wave B and wave C as well as wave (B) has possibly ended at 1.7192, below support at 1.4232 would add credence to this count, then further fall to 1.4000 level would follow but reckon downside would be limited to 1.3655 support and price should stay above previous support at 1.3500.

On the downside, expect pullback to be limited to 1.2830 and bring another recovery. Below 1.2830 would bring test of 1.2757-69 support area, break there would signal a temporary top has been formed, bring retracement of recent rise to previous resistance at 1.2706 (now support), then towards 1.2650-60 but previous resistance at 1.2616 (tentatively wave i top) should remain intact.
 
Recommendation: Stand aside for this week.

 
Longer term – Cable’s rise from 1.0520 (Feb 1985) to 2.0100 (September 1992) is seen as [A], the decline to 1.3682 is labeled as (B) and (C) wave rally has ended at 2.1162 (9 Nov, 2007) which is also the top of larger degree wave B with circle. The selloff from there is a 5-waver with wave (A) ended at 1.3500 (23 Jan 2009), wave (B) itself is labeled as A: 1.6733, triangle wave B: 1.4813 and wave C as well as top of wave (B) ended at 1.7192 (2014), hence the selloff from there is an impulsive wave (C) with wave I : 1.4566, wave II 1.5930, an extended wave III is unfolding and already exceeded our downside target at 1.3500 and 1.3000, hence weakness to 1.2500 and possibly 1.2000 cannot be ruled out, however, price should stay well above psychological level at 1.0000.