GBP/USD: Approaching Exhaustion Phase

Cable continues to make its bullish case by showing resilience since the beginning of this month. Improved fundamental data from UK has been the positive driver for this buy side institutional flow. Grinding price action on an upward trending channel reflects complacent bullish sentiment amid lack of market volatility. We are likely to see further Buy Climax below 1.600, a potential price reversal zone. Loss of momentum and failed tests at this price peak should confirm the beginning of the next phase of Distribution. Any volatility-driven news catalyst should help pave the way for the sellers to step in reversing the tide of the current flow.
While buyers remain in control, we are approaching an exhaustion phase from the technical point of view.

The price action in the last few month’s trending channel has a non-random self-similar affinity with the pattern we have seen from Mar-May 2013. RSI divergence between these time period also shows similar price frequency distribution.

From the Elliottwave perspective, after breaking out from the Weekly triangle, the pair has been in sideways daily consolidation within a range of 1.48-1.58. This range is playing out within a combination pattern. The corrective three wave pattern is currently progressing in its last leg towards the significant resistance level below 1.60. Based on shorter time-frame [hourly,] we will look for selling opportunity on Fibonacci symmetry. Traditional TL resistance along with RSI over-bought signal also complement our bearish idea ahead.

Aggressive traders may enter SHORT at the current price level with a Synthetic position to minimize the risk of being stopped out.GBP/USD: Hourly" title="GBP/USD: Hourly" src="https://d1-invdn-com.akamaized.net/content/picb24f514031d5d0c4254686540413dc0f.png" height="862" width="1920">GBP/USD: Daily" title="GBP/USD: Daily" src="https://d1-invdn-com.akamaized.net/content/pic267c3d0cc52367d5c8ee949993831b16.png" height="862" width="1920">