The internal structure of the GBPUSD currency pair suggests the formation of a global corrective trend – a triple zigzag w-x-y-x-z. On the 1H timeframe, we see the final actionary wave z of the cycle degree.

The wave z most likely takes the form of a primary triple zigzag Ⓦ-Ⓧ-Ⓨ-Ⓧ-Ⓩ. At the beginning of August, the bullish price movement within the primary intervening wave Ⓧ apparently ended, it took the form of an intermediate zigzag (A)-(B)-(C).

It is likely that in the near future the bearish trend will continue to develop in the primary wave Ⓩ, which may complete its intermediate triple zigzag pattern (W)-(X)-(Y)-(X)-(Z) near 1.077.

At that level, wave Ⓩ will be at the 76.4% Fibonacci extension of previous actionary wave Ⓨ.

However, the cycle wave z could be fully completed. As in the main version, it has the form of a primary triple zigzag.

Thus, to confirm the second scenario, it is necessary that the bulls are strong enough to start moving the price within the new trend.

Perhaps in the next coming trading weeks, market participants will observe the construction of the first impulse wave of a potential zigzag of the primary degree.

The price may rise to the previous high of 1.266, and then even higher.

A four-month-old downward sloping support line, near 1.1330, remains on the bear’s radar unless the GBP/USD prices cross the 21-DMA hurdle, around 1.1650 at the latest.

A break of the solid support could potentially trigger a rapid sell-off as there is no significant support until 1.1300. On the upside, a breach of 1.1590 (‘strong resistance’ level was at 1.1630 yesterday) would indicate that the current weakness in GBP has stabilized.

GBPUSD Might Bleed More Before Stabilizing Momentum

Sep 16 2022