Bottom line:  GBPUSD bulls firmly in control as an impulse looks to be complete from 1.1950 through 1.3515 levels respectively. Expect a corrective drop to unfold in the short term.

Technical Analysis:

GBPUSD is looking set to gain further, after a brief corrective drop at least towards 12850/1.2900 levels. Looking into the wave counts since 1.1950 lows print on September 03, 2019, GBPUSD has terminated an impulse rally at 1.3515, last week. After having terminated Wave (4) at 1.2840 levels earlier, another rally subdividing into 5 waves at lower degrees, terminated through 1.3515 levels completing the impulse wave at one larger degree. This is a classic example of an ideal Elliott Wave Impulse and should be now followed by a corrective wave, potentially unfolding into 3 waves (A-B-C). It is advisable to tale partial profits around current levels (1.3410), and allow the corrective wave to unfold lower before initiating longs again. A drop below 1.3049 from here would indicate that the first leg of correction is in place. Please note that support trend line is passing through the 1.2700 mark at this moment, and fibonacci 0.618 retracement of the entire rally is at 1.2550 levels; hence  corrective drop unfolding much deeper cannot be ruled out. A high probable trade direction from here is expected to unfold on the south side, against 1.3515 levels, with potential targets around 1.2800 at least. Please note that Wave (4) termination was around the 1.2850 mark and hence the corrective wave can be expected to terminate close to 1.2800 respectively. As an alternate count, only a consistent drop below the 1.2300 mark will nullify the above bullish structure and threaten the 1.1950 lows. A more conservative approach would be to remain flat and allow the corrective drop to complete, before initiating fresh long positions.

Prepared by

Harsh Japee, Technical Analyst

GBPUSD Chart

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