close icon

GBPUSD and the Unreliable Trend Line

GBPUSD is back in bearish mode after it fell to as low as 1.2245 today. That is 530 pips below the high of 1.2774 reached two weeks ago. While most people would say the Fed’s decision to raise rates is the reason for the pair’s plunge, we think that GBPUSD would have plunged with or without an interest hike. Keep in mind that the Fed raised rates on December 14th, but our premium clients received the chart below before the market opened on December 12th.(some marks have been removed for this article)
In fact, there was a rising trend line, which could have been expected to provide support for GBPUSD’s next leg up. The Elliott Wave Principle, on the other hand, suggested the bears should be able to break that trend line and drag the pair even lower. Furthermore, charts are all Elliott Wave analysts need to make such forecasts. Now, let’s see an updated one of GBPUSD.
Why did traders buy GBPUSD in the two days before the Fed’s rate decision remains a mystery to us, since a rate hike was almost guaranteed. Nevertheless, once the inevitable happened, the market, which has been anticipating it, moved in the right direction. As expected, the rising trend line was broken, opening the door for the larger slump we are witnessing.

Trend lines are a useful tool in conventional technical analysis. However, no trend lasts forever and therefore no trend line holds forever. With Elliott Wave analysis, you no longer have to blindly rely on trend lines in your trading. GBPUSD is a great example.

What to expect from now on? What is the bigger picture saying? Is GBPUSD going to continue even lower or the support near 1.2250 would turn out to be too strong for the bears to breach? Prepare yourself for whatever is coming. Order your Elliott Wave analysis due out every Monday at our Premium Forecasts section. Stay ahead of the news in any market with the Elliott Wave principle.

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

EURUSD Up 420 Pips in a Month as Uptrend Resumes

The inevitable seems to be happening to the U.S. dollar. After record-breaking liquidity injections by the Fed in response to the COVID-19 crisis, the greenback is weakening across the board. The U.S. dollar has recently been declining against its major rivals, including the Yen, the pound and the euro. EURUSD, the most traded Forex pair…

Read More »

GBPJPY Bears Aiming at 120, Before Giving Up

Whether it is because of Brexit or not, GBPJPY has been trading below 160.00 ever since the referendum in June 2016. The pair has been locked in a wide range between 156 and 124 for four years now. Last week, it closed the session at 134.66, down from 138.84 at the open. In order to…

Read More »

Elliott Wave Setup Helps EURUSD Add 325 Pips

EURUSD has been under pressure for over two years now. The pair reached 1.2556 in February 2018, but has been making lower lows and lower highs ever since. Yet, the past couple of weeks painted a different picture. Between May 18th and May 29th, the euro surged 325 pips against the U.S. dollar. In those…

Read More »

EURGBP Pattern Signals Bullish Reversal Ahead

EURGBP has been in free fall since March 19th, when it rose to 0.9500. A month and a half later now, the pair is hovering below 0.8730, down 8% from the peak. Is the downtrend going to continue or should we expect a change of direction? That is the question we hope to answer in…

Read More »

GBPUSD Aiming at 1.30, but May Tumble to 1.21 First

Not long ago, we shared our long-term view of GBPUSD. In our opinion, the down-phase of the pair’s cycle, which is in its 13th year now, is almost over. One last dip to 1.1000 is likely to be followed by a major bearish reversal and the start of the next up-phase. Now, we are going…

Read More »

British Pound ‘s 13-Year Downtrend Almost Over

The thirteen-year period between 2007 and 2020 started with the biggest crisis since the Great Depression and is about to end with the biggest crisis since the Great Depression. Between the two, the longest economic expansion on record took place. And while stock markets around the world reflected that recovery, some currencies have been in…

Read More »

Ahead of the Move: EURUSD Adds 500 Pips in a Week

At the start of last week EURUSD was trading below 1.0700. The pair had fallen from as high as 1.1496 in just two weeks as coronavirus cases in Western Europe kept climbing disturbingly fast. And while fundamental traders had every reason to expect more weakness, the charts were sending a different message. The Elliott Wave…

Read More »

More analyses