We have been vouching for a potential larger degree top in place in GBP/USD since mid April 2018 when 1.4376 highs were formed. Since then the pair has unfolded into 5 waves seen on smaller timeframes, breaking below the trend line support as seen here. Please note that GBP/USD is trading well below its critical past support at 1.3700 levels. The above criteria confirms that medium term trend for GBP/USD has reversed lower already and bears should remain in control going forward. Selling on rallies will remain a safe trading strategy going forward. Looking into the wave counts, a larger degree wave (4) seems to be terminated at 1.4375 levels and subsequent drop through sub 1.3460 levels has unfolded into 5 waves (impulse) forming wave 1 of the resumed downtrend. If this count holds to be true, GBP/USD is now expected to produce a counter trend corrective rally that may push prices at least towards 1.3800 levels or upto 1.4000 levels going forward.
Aggressive traders might want to go long with tight stop below the 1.3450 levels. Conservative traders may look to sell again on rallies through 1.4000 levels.
Watch out for ECB president Draghi's speech in Frankfurt at 08:00 AM EST.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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