“GBP was front and center last week as the currency has broken a primary trendline formed across the lows since ’93 (1.2788)
Going back even further, GBPUSD started a multi-year corrective process at the peak in ’07, within which it is currently in the later stages of a final C wave. Because of the impulsive nature of wave A (from ’07 through ’08), it’s actually not too surprising to see an equally impulsive sell-off in wave C (since Jun. ’14).
In the nearer term, it may have just recently completed a 3 rd of 5-waves from Jun. ’14 (i.e. within the larger degree C leg). It has come close enough to reaching the ideal target at 1.1681 (1.618 from Jul. ’15). ‘
As such, a period of counter-trend corrective price action seems likely, before the next leg lower. Put another way, it’s now likely based and started a corrective process/ 4 th wave.
A 4 th wave typically retraces back into wave iv/3 territory; in this case 1.2798-1.3445. It also often retraces between 23.6% and 38.2% of the length of wave 3; also ~1.28 and 1.34.
Bottom line, GBPUSD may consolidate in the near-term, but it is likely to continue declining over time”.
Copyright © 2016 Goldman Sachs, eFXnews™
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