GBP/USD: The Bearish Scenario

17 de jun. de 2021

GBP/USD has for sure been on an impressive run to the upside for many months now, and it's worth to consider that a correction is underway, specifically Wave (IV) of 1.

Take notice of a few key points:

• Wave (III) is demonstrating a 1.618% Fibonacci extension of Wave (I), this is typical for a Wave 3 extension.
  
• The internal wave structure of Wave (III) is clearly counted as a 5 wave impulse move, suggesting that Wave (III) is complete.
  
• GBP/USD has broken the key channel trendline to the downside, an early sell signal (it's possible that GBP/USD will retest the trendline).
  
• If this Elliott Wave count is true, the correction projects to complete at the most common Fibonacci retracement level for Wave 4, 38.20% of Wave 3. It just so happens that 1.35000, a strong psychological round number, lines up with the 38.20% Fibonacci level.
  

Remember, Wave 4 does not overlap with the price territory of wave 1 therefore, as long as GBP/USD remains above 1.26476, this setup remains valid.
The invalidation level (suggested stop-loss) is placed at 1.42504.

Overall, a very interesting setup that is worth considering.

Let us know your thoughts in the comments.
Your feedback is appreciated.

Thank you for reading!