Elliott Wave Weekly

GBP/USD Elliott Wave Analysis

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GBP/USD – 1.2933

 
GBP/USD – Wave 4 is unfolding as an (A)-(B)-(C) and could have ended at 1.7192

 
As cable’s rebound from 1.2589 turned out to be much stronger than expected, suggesting the correction from 1.3048 has ended there and although price has eased from 1.3030, reckon downside would be limited to 1.2790-00 and bring another rise towards 1.3048 resistance, break there would extend recent upmove from 1.1986 low to 1.3140-50 (38.2% Fibonacci retracement of 1.5018-1.1986) and possibly 1.3200 but near term overbought condition should prevent sharp move beyond 1.3300, risk from there is seen for a retreat later.  


Our preferred count on the daily chart is that cable's rebound from 1.3500 (wave (A) trough) is unfolding as a wave (B) with A ended at 1.7043, followed by triangle wave B and wave C as well as wave (B) has possibly ended at 1.7192, below support at 1.4232 would add credence to this count, then further fall to 1.4000 level would follow but reckon downside would be limited to 1.3655 support and price should stay above previous support at 1.3500.


On the downside, whilst initial pullback to 1.2800 cannot be ruled out, reckon support at 1.2760 (previous resistance) would hold and bring another rise later. A daily close below 1.2700-10 would defer and prolong choppy trading below 1.3048, bring weakness to 1.2650-55 but still reckon downside would be limited and said support at 1.2589 should remain intact. In the event sterling drops below this support, this would extend the fall from 1.3048 for retracement of recent upmove to 1.2550, then towards 1.2500.
 

Recommendation: Buy at 1.2800 for 1.3000 with stop below 1.2700.



 
Longer term - Cable's rise from 1.0520 (Feb 1985) to 2.0100 (September 1992) is seen as [A], the decline to 1.3682 is labeled as (B) and (C) wave rally has ended at 2.1162 (9 Nov, 2007) which is also the top of larger degree wave B with circle. The selloff from there is a 5-waver with wave (A) ended at 1.3500 (23 Jan 2009), wave (B) itself is labeled as A: 1.6733, triangle wave B: 1.4813 and wave C as well as top of wave (B) ended at 1.7192 (2014), hence the selloff from there is an impulsive wave (C) with wave I : 1.4566, wave II 1.5930, an extended wave III is unfolding and already exceeded our downside target at 1.3500 and 1.3000, hence weakness to 1.2500 and possibly 1.2000 cannot be ruled out, however, price should stay well above psychological level at 1.0000.

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Author: Action Forex
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