Written by www.ew-forecast.com |
GBPUSD fell to a new low on Friday after we recognized a corrective retracement in wave 4-circled. That new low was wave five, final leg in wave iii, so pull-back that is unfolding now is probably wave iv that will look for resistance around 1.6070/90 area.
With some bullish view on USD Index as described below, we are still keeping a close eye on USDJPY that could be in final stages of a larger contra-trend movement. We see a wedge shape formation that has taken place in the last few days that could be an ending diagonal. This pattern occurs at the end of a larger trend, and usually predicts a strong reversal in trend. It’s also important to know that each leg of an ending diagonal is made by three waves. For now we have a textbook example of this structure. If our bias is correct then pair is now in wave (v), final leg of an ending diagonal that could find a support around 96.60/96.80. Pair on the radar screen!