The GBP/USD is showing a bullish breakout above the resistance trend line (dotted red) after a late bullish bounce at the 88.6% Fibonacci retracement level. This could confirm the contracting triangle chart pattern.
4 hour chart
The GBP/USD bullish break (green check) is aiming for the Fibonacci targets of wave C (orange) and wave D (green). A bearish bounce at 1.3160 or 1.3220 could confirm the wave D (green) and indicate a new bearish swing for wave E. A break below the bottom of wave C invalidates (red x) the triangle pattern.
1 hour chart
The GBP/USD showed strong bullish momentum yesterday, which is likely a wave 3 (light green) impulse. The pullback seems to be a wave 4 (light green) after bouncing at the 50% Fibonacci retracement level. A breakout above the resistance (red) confirms (green check) bullish potential whereas a break below the 61.8% Fib invalidates (red x) the wave 4 (green).
The analysis has been done with SWAT method (simple wave analysis and trading)
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This article was originally posted on FX Empire