Gbp/Usd Heading Lower After Test Of Resistance

In its ABC correction of the May 2001-November 2007 rally, the Pound has likely reached a W.4:3 or C high in both timeframes and is expected to move lower to complete W.5: 3 or C over the next few days or even weeks. A close below 1.7444 definitively confirms that W.4 is complete. In the smaller timeframe the Pound has not yet completed w.4 of W.5:3 or C, indicating that price is likely to move higher before continuing the bearish trend.

Multiple-Timeframe Momentum: Mixed.

The imminent bearish reversal on the weekly stochastic signals growing bearish bias as GBPUSD approaches a multiweek high that should be followed by lower prices over the next weeks. The bullish reversal on the daily stochastic signifies rising prices over the next several days, consistent with the smaller-timeframe wave structure.

Implications: Completing a Corrective Rally Before Moving Sharply Lower.

Probable completion of W.4 in both timeframes indicates that GBPUSD is beginning a decline that should last several weeks. A bearish reversal on the weekly stochastic and a close below 1.7444 should be followed by a decline to 1.6688-1.7111. The Pound may move higher to 1.7904-1.8180 to complete w.4:5 before continuing the multi-week W.5:3 or C decline.

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