Bottom line:  GBPUSD bullish structure remains very much as corrective drop might be complete at 1.2770 lows on February 07, 2020.

Technical Analysis:

GBPUSD bulls remain firmly in control since the corrective drop has been quite shallow at 1.2870/77 levels until now. A minimum requirement for an A-B-C drop is complete as prices dropped below the 1.2900 mark earlier. Also note that in a strong bullish trend, corrective waves normally terminate around the 38.2% fibonacci retracement. Keeping the above in mind, a larger degree Wave (2) might have potentially terminated at 1.2877 levels and bulls are poised to produce Wave (3) higher. If the rally from 1.2877 sub-divides into 5 waves, it could confirm that a bottom is in place. Until that happens, probabilities remain for a drop towards 1.2760 levels as Wave C could still be unfolding (as an ending diagonal). Immediate resistance is at 1.3200 levels and a break above that would certainly confirm that GBPUSD has bottomed and Wave (2) is in place at 1.2877. It remains to be seen how the price action unfolds from here. Looking into the overall wave structure, GBPUSD has already produced an impulse wave between 1.1950 and 1.3515 labelled as Wave (1). An A-B-C Wave (2) could be complete at 1.2877 or might terminate at 1.2760 going forward. In either case, GBPUSD remains bullish until prices stay above the 1.1950 mark. Traders might be willing to initiate long positions around 1.2760, with protective stops at 1.1950 and projected target above 1.4200 respectively. Alternately, if Wave (2) is already in place at 1.2877 levels, traders might want to allow a break above 1.3200 first, and then consider long positions on corrective drops. Watch out for a break above 1.3200 levels to confirm bottom in place.

Prepared by

Harsh Japee, Technical Analyst.

GBPUSD Chart

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