Hello, traders and a good day. Today, let us take an Elliot wave perspective and take a look at GBP/USD and its 4h time frame.

On the 4h chart of GBP/USD, we can see that cable can be trading in a bigger five-wave bullish development. Specifically, we see price trading at the end of an impulse(an impulse is a five-wave pattern), with red wave 5) leading the way.

GBP/USD, 4h

If we dig deeper and see that current red wave 5) is also unfolding a five-wave movement, we find out that the Elliott wave theory and its patterns tend to move based on investors mood, or crowd psychology, between optimism and pessimism in natural cycles. This means that cycles and their patterns are repeatable and are visible in price movements at any degree of the trend (this means 1h chart, 4h, daily, weekly or even monthly).

That said, current wave that we are observing is a corrective pullback labeled as wave 4, that can find support around the 1.3462/1.3513 region, where Fibonacci ratios can act as support and reversal points and push price higher. However, if price crashes down and trades below the 1.3417 level, then we would regard the count as invalidated and edit is because waves 1 and 4 must not overlap(only in Elliott wave ending diagonals an overlap between wave 1 and 4 is possible).