GBP/USD Daily Outlook

Daily Pivots: (S1) 1.5447; (P) 1.5742; (R1) 1.5916; More

GBPUSD continues to spiral lower today and the current fall fro 1.6671 is expected to extend further to test 1.5269 low. On the upside, above 1.6198 will suggest that such decline has completed. Also this will indicate that consolidation that started from 1.5269 is still in progress and another up leg has stared for a retest of 1.6671 resistance. But after all, note that the path of consolidation will remain unpredictable as long as 1.5269 low remains intact.

In the bigger picture, while rebound from 1.5269 was strong, there is no confirmation of a medium term bottom yet. There are some different interpretations of the structure of the whole down trend from 2.1161, with different projection targets. The most bearish case is that fall from 2.0158 is the third wave in whole fall from 2.1161 while fall from 1.8668 is the third wave of the fall from 2.0158. In other words, GBP/USD is just in the middle of the whole down trend from 2.1161. The least bearish case is that the fall from 1.8668 is the fifth wave of the whole five wave decline from 2.1161 and is nearing an end. Nevertheless, in any case, the fall from 1.8668 needs to complete a five wave structure before considering that a medium term bottom is formed.

Having said that, medium term outlook will remain bearish as long as 1.6786 support turned resistance holds and a new low should be made before making a medium term bottom. However, above 1.6786 will indicate that fall from 1.8668 has possibly completed. It will also be the first alert that a medium term bottom is in place and break of 1.7630 will confirm. In such case, some large scale consolidations will follow.

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