On the long term monthly chart, from the high of 1.7196 in July 2014, price has been declining to a low of 1.1958 in Jan 2017. We saw another test and break of Jan 2017’s low to a new low of 1.1958 in September 2019. This September low could be the terminal 5th wave and Sterling could be heading higher.
From the September low, we may have seen the end of wave 3 at 1.3015 and we may have seen an A-B-C correction. This correction could have ended at 1.2765. The low was also supported by the 20EMA. This correction may be the first part of a bigger correction but we are inclined to believe the correction is over as the wave 2 was long and deep. The wave 4 should be short and shallow. If price holds above 1.2765, price could be heading higher to 1.3070 or 1.3170 in the short term. On a longer term basis, 1.3340 is likely.
Stochastic is almost into the oversold zone. There could be limited downside, according to Stochastic. MACD is bullish, meaning the trend is still up. The faster MACD line is turning up from the zero line, hinting that the correction from the high of 1.3015 to 1.2765 could be the end of the correction. Both momentum indicators are hinting of further price advance and limited downside.