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EW ANALYSIS: Potential Bullish Setup On GBPAUD

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Hello traders!

Today we will talk about GBPAUD and its potential bullish setup from technical EW perspective.

As you can see GBPAUD is trading bullish and looking at the 4-hour chart, we can see a slow three-wave a-b-c corrective decline from the highs, ideally in wave 4 according to the 38,2% Fibonacci retracement and previous three-wave correction in wave 2. So, if we are on the right path, then we should see a continuation higher back to 1.9100 highs for wave 5.

What is very interesting is that we have seen strong and impulsive bounce after a completed ending diagonal (wedge pattern) right at the end of the month, which can be an indication of a completed correction in wave 4. Another interesting thing is that after today's intraday three-wave a-b-c corrective decline into an important 61,8% Fibonacci retracement, we have also noticed a potential inverted Head And Shoulders pattern.

So, from trading perspective we want to see a broken neckline and 1.8800 region next week, which would confirm our wave count. And if we are right, then we will probably see a bullish continuation within a new five-wave bullish cycle back to 1.9100 highs for wave 5. If from any reason goes back below 1.8650 region, then our count would be invalidated.

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Intraday-hourly chart haven't played out, but looking at the bigger picture,it still looks corrective. However as said earlier, 1.8800 level needs to be reached to confirm bullish back to highs for wave 5. Invalidation level remains at 1.8500.

We are still bullish on GBPAUD while it's above 1.8500 invalidation level, because the wave structure is clearly corrective on the daily chart. In the hourly chart it made an interesting five-wave rebound again, so we are still looking for the bullish setup where ideal support would be around 1.8600 level. And, if we get a strong bounce down there, then it's a high probabily that correction is completed. However, we still need to see 1.8800 to confirm bullish continuation back to highs.