Discover the upcoming 1.37170 peak and potential sharp downtrend in the GBP/USD pair using Elliott Wave Theory. Read our technical analysis now!
As one of the most established and volatile pairs in the foreign exchange markets, the British Pound / US Dollar (GBP/USD), aka "Cable", is currently exhibiting a structure that has investors holding their breath. The golden rule for success in Forex markets is the ability to foresee when trends will exhaust and where corrective waves will conclude. At this juncture, the Elliott Wave Theory deciphers the psychology behind price action, offering us a unique roadmap.
Today, we turn our attention to the 4-hour (4H) chart of the GBP/USD pair. We can clearly see that the recovery efforts initiated after a prolonged decline have now reached a critical crossroads. Is this rise the harbinger of a new bull market, or is it the final bull trap set before a massive drop?
Elliott Wave Analysis: The Last Breath of the (B) Correction
Examining our wave count on the chart, we understand that we are in a major corrective phase in the macro picture. Following its fierce decline in the past, the pair is constructing a massive upward (B) corrective wave. According to Elliott rules, such large corrections are subdivided into complex sub-waves.
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Current State: The price is currently within the red 'C' wave, which is the very last leg of wave (B). Zooming into a more micro scale, we are experiencing an uptrend in the blue sub-wave (v), which is the final impulse of this 'C' wave. In short, we are at the very last and weakest link of the rally.
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Critical Reversal Target: In technical analysis, the points where corrective waves most frequently fade and the trend reverses are Fibonacci levels. On our chart, the strongest candidate for the completion of this structure is the 1.37170 resistance, which aligns perfectly with the 0.786 Fibonacci retracement level of the previous major drop.
Why Does It Matter? (The Threat of an Approaching Massive Drop)
The reason this analysis is of vital importance for investors is the likelihood of the major scenario, indicated by the thick red arrow on the chart, coming into play once the 1.37170 level is reached. When the (B) correction is completed, according to market rules, a much more destructive and violent primary (C) downward wave will commence.
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Risk Management (For Bulls): For those in Long positions, the 1.37170 zone is a high-alert area for profit realization and protecting capital.
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The Opportunity (For Bears): If the price shows a clear rejection candle from this resistance, it will give birth to an exceptional Short selling opportunity with an outstanding risk/reward ratio.
Summary Table: Critical Resistance Level to Watch
| Wave Structure | Level / Zone | Technical Expectation |
| Sub-wave (v) Projection | ~1.36500 - 1.37000 | Continuation of the current upward impulse |
| Wave (B) Completion Target | 1.37170 (Fib 0.786) | Major Resistance and Trend Reversal Zone |
| Expected New Wave | Direction of Red Arrow (Down) | Sharp wave (C) downtrend |
Conclusion and Call to Action
These final upward efforts in the GBP/USD pair are risky for those wanting to jump on the last wagons of the train; however, they offer a flawless tracking environment for strategic traders hunting for the major trend reversal. Monitoring price action at the 1.37170 resistance might prove to be the most profitable strategy of the coming weeks.
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