Wave A is a double (flat-x-zigzag) that terminated on June 17, 2015.
Wave B as labeled is a triple (flat-x-zigzag-flat) that appears to have terminated on Jan 21.
That suggests wave C would subdivide as 5 waves higher towards 1.54 and possibly 1.60.
This is the favored count, but not the only count. There are other possibilities so don't mistaken this to believe prices ONLY have to go higher, because they don't. If prices fall below this week's low, we'll reconsider the counts/patterns.
A meaningful move above 1.45 would punch through significant resistance that could be symptomatic of the undertones.
We touched on these undertones for Sterling in yesterday's GBP/JPY post. So this appears to be somewhat broad based at least in the shorter term. Longer term, we are looking for Sterling to be much weaker.
In the chart above, note how SSI was shrinking as the pair was falling out of bed in January. This shift in sentiment during a strong trend is another symptom of prices searching for a bottom.
I would encourage you to check out the live SSI feed so you can keep an eye on shifting sentiment.
Lastly, the equity market sell off has market expectations for future rate hikes on the skids. This was a big risk coming into 2016 that DailyFX highlighted in their Q1 2016 US Dollar forecast. Check it out here
Divergences, as you know, doesn't mean prices will turn. It simply means the trend is losing momentum. I think of it like driving a car that just ran out of gas. The car still moves forward, albeit at a much slower pace. Then, if the car were on an incline, it would stop and reverse.
So momentum divergence at a place that makes sense from a wave count would be ideal. Typically divergences appear in 5th wave relative to the 3rd wave and in B waves and sometimes C waves (or other ending waves like Y or Z).
GBPUSD -> Long positions are 2.9% higher than yesterday and 5.9% above last week. Short positions are 3.8% higher than yesterday and 6.4% below levels seen last week.
SSI reading +/-3 are considered extreme. So GBPUSD positioning hasn't moved dramatically in the past week. 1.45 is the area that if prices jump above, I would be looking for a corresponding drop in SSI.