GBP/USD Roller Coaster Part of Wave 4 Pullback in Uptrend

The GBP/USD is creating an increased price volatility between 1.3205 support and 1.35 resistance zones. That said, price action remains in a solid uptrend when comparing the moving averages (21 ema above 144 ema above 610).

What is next for the Cable? How can the Elliott Wave and chart patterns help our analysis? Let’s review them all.

Price Charts and Technical Analysis

The GBP/USD is building a bullish 5 wave pattern (purple) after a long-term downtrend. The wave 5 could complete a larger wave A (blue) of an ABC (blue).

The main question is whether the smaller wave 5 (pink) has already been completed. And for the moment, the answer seems to be no. Why?

Because the recent ups and downs are probably part of a wave 4 (pink) retracement. This remains valid as long as price action respects the support zone of the uptrend channel (green).

A break below the support invalidates (red circle) this wave outlook and indicates a deeper bearish retracement. A bullish bounce, however, could indicate one more push up towards the top of the channel around 1.37.

On the 1 hour chart, it is possible to monitor the development of the potential wave 4 (pink). The upside looks like an ABC (orange) that completes wave B (grey).

A bearish breakout could confirm the wave C (grey). The main target zone is the previous bottom (blue box).

A bullish breakout followed by a bull flag and another break upwards would invalidate (red circle) the expected bearish wave C.

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Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter