The GBP/USD Triangle Continues Developing

GBP/USD obviously is aiming to reach the support trend line of the triangle that has been forming since the beginning of September 2016.

There are only 25 – 30 pips left until it does reach it and likely no one doubts that will happen. With that the pair will form the fourth wave of a classic Elliott wave triangle.

According to the Elliott Wave theory the fifth wave should be to the downside toward the support trend line and the sixth should break out to the upside, which is logical, because the triangle is forming at historical lows and it could become a trend-reversal figure.

That is according to Elliott.

According to other technical analysis theories, however, four waves are enough to say that there is a fully formed triangle. So there is a scenario where the pair will break out to the upside now, or it will reverse to the support trend line and break out to the downside.

For now it can’t be said for certain which one of these scenarios will occur, but we do need to focus on this pair. In either case there will be a large movement if the limit of the triangle is reached.