This year, the cable has struggled to recover from the losses it received following the Brexit vote in 2016. The chart has managed to move from a low of 1.1867 to the current price of 1.3463 with the main challenge being the recent flash election called by Theresa May.
Nonetheless, the pair has gained by about 11% this year. It has also established a pattern of higher lows and higher highs as investors start questioning the severity of Brexit.
This week, the pair has managed to see significant gains fueled by the weaker dollar and positive QoQ GDP reading of 1.7% against the expected growth of 1.5%.
In the chart below, at the 1.3346 level – labeled 1- the cable established a double bottom position before starting a near perfect Elliot Wave pattern. After ending the wave, the chart found its support at 1.3430 level and formed a double bottom again. The line is labelled 3. It then went up, moving past the strong top level of 1.3453 to its current level of 1.3464. With this arrangement, we may see the price to continue moving up, potentially to the 1.3484 which is an important resistance level.
Another scenario is a pullback which may happen as traders take profits as the year ends today. As shown below, the short-term chart is in an overbought territory which could warrant a sell-off.
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