A decline on GBP/USD (FOREX:GBPUSD) from 2008 peak to 2009 low was in five waves, which in Elliott Wave theory indicates a direction of a larger trend. This is called an impulse wave, and once this leg is complete, you will see a reversal in price, against the trend, normally into a slow, choppy and overlapping price action, which is personality of a correction. Well, this is exactly what this market has experienced since 2009 lows. As such, we think the pair made a corrective pattern in wave (B) position called a triangle. In fact, this triangle appears complete after recent break through 2009 trend-line that put prices in bearish mode for wave (C) down. If we are correct, then current pull-back should find a top around 1.6000 area where broken support line will ideally become a resistance line and send prices sharply to the downside.
GBP/USD Weekly Elliott Wave Analysis
On the daily chart we are tracking a corrective rally from March low, which is a complex pattern, most likely a flat in wave II. If we are correct then the pair is now in the final stages of an up-trend, which means that a reversal could follow in the near future, especially if we consider an ending diagonal that usually predicts a sharp reversal in price. However, from a confirmation point of view we need impulsive fall back to 1.5700 to call end of a corrective rally.
GBP/USD Daily Elliott Wave Analysis