Bearish Triangle on USD Index Can Support GBPUSD

Intermediate

Hello traders,

USD index is trading sideways for some time now, ideally unfolding an Elliott wave triangle correction in wave B that is part of a three-wave corrective decline. A triangle is a continuation pattern, which has five legs in a sideways range, so breakout is expected to occur lower after A-B-C-D-E sub-waves: ideally into the same direction as previous wave A. 

Now we see price making an intra-day recovery, ideally leg E) of a triangle with possible resistance at the Fib. Ratio of 61.8 (99.9/100.0 zone), from where wave C lower can start forming.

USD Index, 4h

USD Index 4h Chart 20200522

Well, if USD Index is headed lower after that pattern unfolds, then cable can see more upside from current supports. In fact, on a daily chart of GBPUSD we see price in a possible higher degree recovery that should be made by three waves. Ideally, this recovery is missing a third leg up, which may resume from current 38.2, 50.0 and 61.8% Fibonacci levels, so wave B can be ending.

GBPUSD, daily

GBPUSD Chart 20200522

Elliot Wave Technical Analyst

Gregor Horvat is based in Slovenia and has been in the Forex market since 2003. He has been working for Capital Forex Group and TheLFB.com.

He is the owner of www.ew-forecast.com, which prov...continued

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