GBP/USD - Correcting in wave 2 before the rally higher

GBP/USD - Correcting in wave 2 before the rally higher

 

 

GBP/USD - Correcting in wave 2 before the rally higher 

Cable is fighting a lot of opposing forces at the moment. The rally in wave 1 stopped just below the 30 year horizontal resistance-line. This line acted as support for Cable since January 1986 and was broken in June 2016, which shifted its position from support to resistance. However, I think the dip below soon will break back above this horizontal pivot point near 1.3700. 

From an Elliott wave point of the view, my long term count shows, that an expanded flat B-wave is developing. We saw wave A rally from the 2009 low at 1.3504 to a high of 1.7191 in July 2014 from where wave B took over. The decline in wave B became almost exactly 138.2% longer than wave A and completed with the test of 1.1950 in October 2016 from where an impulsive rally in wave C took over. We saw wave 1 rally from the 1.1950 low to a high of 1.3658, just below the horizontal pivot point near 1.3700 and the correction in wave 2 is currently developing, for a decline close to the 1.2780 - 1.2822 from where a strong rally is expected in wave 3. 

The long-term cycle analysis also supports a rally in the coming years. The long-term cycle bottom in November 2016, whereas the price bottomed the month before. The next cycle peak is not seen before November 2020, which supports the expectation of a continuation higher over the coming years. 

If we zoom in to the daily chart, we can see, that wave 2 already has completed wave A and B and wave C lower towards the 1.2780 - 1.2822 is developing. Once wave C and 2 completes near the support cluster a strong rally will be expected in wave 3.