Bears may take over again

May 24, 2016 09:47 AM

The British pound/U.S. dollar (GBP/USD) currency pair has recovered strongly during the past three months, but based on structure and personality of a bounce we assume it can be a corrective move.

We are looking at black wave IV which is now showing us first signs of a completed recovery after recent turn down from 1.4769. Notice that price is now trading beneath 1.4564 level as well which was a low of 2015 so it appears that it's acting once again as resistance which is important for bearish look. Also, lets keep in mind that trend since July of 2015 is bearish so continuation lower in days and weeks ahead should not be a surprise. We think that market may reach 1.3300-1.3500 area by the end of the year.

GBP/USD, Daily

On the lower time frames, the Cable has been trading to the upside last week from 1.4330 to 1.4666, so it appears that corrective wave two was flat if we consider recent turn down from 1.4667 highs that looks like a small impulse, labeled as wave 1. That been said, a decline can be start of a new bearish impulse; ideally of a third wave lower that will take pound beneath 1.4348 support and then even to 1.4100. For now invalidation level remains at 1.4769, but rally above 1.4667 would already threaten the bearish look.

GBP/USD, 4-hour

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: