GBPUSD had raised through 1.3951 high yesterday, before pulling back. It was discussed in the weekly report for a possible push through 1.3950/60 zone, before topping out. Believe it or not, probabilities remain high for a bearish reversal from here.
It could be too early to confirm a top in place but a break below 1.3775 immediate support will add further confidence to the bearish setup. Going back into the wave structure, GBPUSD had terminated larger degree Wave 4 around 1.2685 levels in September 2020.
Since then Wave 5 was in progress and might have terminated yesterday around 1.3951 levels respectively. Also note that GBPUSD unfolded into 5 waves between 1.2675 and 1.3951, marking an impulse wave.
If the above structure holds well, GBPUSD might have either topped at 1.3951 yesterday or is very close to carving a meaningful top soon. Either way, upside remains limited and bears might be poised to push lower towards 1.2675 mark in the next several weeks.
Furthermore, please note that a break below 1.3560 would confirm with certainty that GBPUSD has reversed its trend. Prices would enter the sell zone of the support trend line and selling on rallies might be a preferred trading strategy.
Over the short term, it might be good to wait for a break below 1.3775 support at least, before considering GBPUSD shorts. Once bears are able to break lower, it would be good to sell through 1.3850/60 levels going forward.
Finacademy Technical Team
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