The triangle forming over the previous 6 months has finally been broken. The move to the upside goes against our analysis from last month, which suggested that the triangle would form wave (4) and break to the down side. However, our outlook for GBPUSD remains bearish. The latest move suggests that the triangle forms only B of wave (4), as opposed to the whole of wave (4). A declining wave (5) should follow, leading to a new low beneath 1.1949.
EURUSD finished April by recovering some ground from the sharp drop by wave (1). However, as with GBPUSD, our outlook for the pair is still bearish. It now appears that wave (2) is forming an expanded flat wave. The overlapping rise from 1.0339 suggests that wave C is finishing on a diagonal. If this is the case, we are looking at a ceiling of 1.0986. However, as we have the French Election coming in, we are also taking into account that the price may go to 1.1093 (corresponding to a Fibonacci level of 78.6%) before EURUSD continues it’s decline.
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