British pound: When support become resistance

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

About the Author

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and He also is founder of forex services on provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website:

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