miroslava.micunkova's picture

What future holds for GBPUSD post referendum? Price action analysis since the 2007-2008 financial crises

GBUSD reached an all-time traded high at 2.1158 in late November 2007 on the verge of the financial crisis. Bottoming out at 1.3500 in January 2009, initial rally retraced close to 50% of the drop at 1.7041 in August that same year. Wide swings followed, forming a multi-year trading range until tracing out a bullish double bottom base at 1.4835 - 1.4818 (March & July 2013 lows). Completed by the break above the 1.5750-51 key resistance, major rally unfolded, en route breaching a 4-year downtrend-line.

Peak has been reached at 1.7186 on 15 July 2014, retesting the 50% retracement area, however exceeding the previous 1.7041 August 2009 high ahead of a sharp correction.

Correction under Elliott Wave Theory usually enfolds in total of three waves (A,B,C) following a pattern referred to as Zig-Zag.  Under such an assumption, GBPUSD has so far completed the first corrective leg at 1.6059 with a second leg "B" so far retracing the usual 38.2% of the wave A. As no signals of a lasting top has been given yet, recovery rally may run up towards 1.6622 possibly 1.6755. Final C wave correction is thereafter expected to break below the 1.6059 early September low towards 1.5700-1.5800 levels ahead of a renewed strength.