When we last wrote about GBPUSD Britain was still an EU member. Today, that is no longer the case as the country left the Union on January 31st. On the other hand, the pair is roughly unchanged, currently hovering around 1.2900. In fact, GBPUSD has been tracking a classic Elliott Wave pattern. Take a look at it on the chart below, published two months ago.
On December 19th, we identified a five-wave impulse to the upside from 1.1959 to 1.3515. Every impulse is followed by a three-wave correction. That is what we thought was in progress when we shared this chart with our readers.
The drop from 1.3515 must have been wave “a” of a larger a-b-c zigzag. So it made sense to expect a recovery in wave “b” followed by more weakness in wave “c”. Two months later today, here is how things went.
Wave “a” ended at 1.2905. Then wave “b” caused a sharp surge to 1.3284 by the end of December 2019. Wave “c” has been in progress since the start of 2020 and appears to be an ending diagonal pattern.
If this count is correct, GBPUSD is on the verge of completing a bullish 5-3 wave cycle. The theory states that once a correction is over, the larger trend resumes in the direction of the impulse. Here, once wave “c” is over, a bullish reversal can be expected.
Similar Elliott Wave setups occur in the stock, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!