GBP/USD 3rd Elliott Wave might pull back soon

• GBP/USD trades 0.35% lower on Monday despite USD weakness against the EUR.
• The price waves have moved to a new wave low but there could be a retracement soon.

GBP/USD 4-hour chart

GBP/USD has been in a downward trend since 10th June making some significant lower highs and lower lows. The price has now moved toward the 76.4% Fibonacci retracement which matched up very nicely with the 138.2% Fibonacci extension. 

There is also a bullish divergence on the Relative Strength Index indicator. If you look closely you can see the indicator waves have made a higher low and the price made a lower low wave pattern. 

The most important resistance in the Elliott Wave pattern is the wave 1-2 low of 1.2454. If the wave 1-2 low is broken to the upside this would invalidate the pattern and the bulls might regain control of the market.

Interestingly, close to that level the 50% Fibonacci retracement and 50% red Fibonacci singular wave measurement confluence. This means it could be an important zone. This move has moved pretty low pretty fast. There are now some indications that the sell-off could be losing momentum but if the low of 1.2251 breaks then its game on for the bears.

Additional levels