Forex Flash: After a 5-wave pattern down, GBP/USD due for 2nd wave recovery? - JPMorgan

According to JPMorgan FX strategist Niall O'Connor, "the breakout of a several years-long triangle consolidation to the downside in Cable is a strong indication of what´s to come in the coming weeks and months..."

However, he notes that "displaying a 5-wave pattern down in the decline from 1.6379 to 1.5631 we could be due for a broader 2nd wave recovery first, which could stretch out to 1.6178/1.6202 (pivot/int. 76.4 %)."

"The big picture is very negative but a break above 1.5840/82 could trigger a stronger recovery first. The risk of missing one leg down for the completion of the 5-wave pattern (wave I of higher scale) towards 1.5553/30 (Fib.-projection/int. 76.4 %) however persists as long as 1.5840/81/82 (minor 38.2 %/pivot/200 DMA) is capping the upside" he adds.