Diagonal Pattern - Bullish or Bearish GBPUSD? 1.5290 Key
Updated
Taking a step back, this move from the summer 2015 highs is either a 'B' wave or a diagonal of some sort. This could be a leading diagonal lower in a wave 3, but the higher probability count is an ending diagonal of a 'B' labeled in the chart above. The wave relationships play out to where the Dec low occurs near 1.618 at multiple levels.
Based on the wave count above, blue wave 'C' would move higher in 5 waves. The question is, does it take place from current levels or slightly lower levels? I don't have the answer to that but a break above the red ii-iv trend line would give us a long signal. That line crosses near 1.5290.
If prices break to new lows before we break the red ii-iv line, I would shift the labels on the ending diagonal to the right meaning the resolution is similar, but starting from lower levels.
Notice how the Speculative Sentiment Index (S.S.I.) is getting progressively smaller on each dip lower. It has shrunk from +3.5 to + 2.5 to + 1.5 (approximately) on each dip. This is another bullish undertone to the market and factored into the preference towards this being a 'B' wave.
Follow real time sentiment here to see if it grows more negative if prices push above the red resistance line.
Based on the wave count above, blue wave 'C' would move higher in 5 waves. The question is, does it take place from current levels or slightly lower levels? I don't have the answer to that but a break above the red ii-iv trend line would give us a long signal. That line crosses near 1.5290.
If prices break to new lows before we break the red ii-iv line, I would shift the labels on the ending diagonal to the right meaning the resolution is similar, but starting from lower levels.
Notice how the Speculative Sentiment Index (S.S.I.) is getting progressively smaller on each dip lower. It has shrunk from +3.5 to + 2.5 to + 1.5 (approximately) on each dip. This is another bullish undertone to the market and factored into the preference towards this being a 'B' wave.
Follow real time sentiment here to see if it grows more negative if prices push above the red resistance line.
Note
If the Dec 2 low is broken, this ending diagonal pattern may simply be shifted to the right meaning that new low could be wave (v).
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