GBP/USD Elliott Wave Analysis

GBP/USD - 1.6483

GBP/USD - Wave (v) of C is underway towards 1.7528

Although the British pound rose to fresh 2009 high of 1.7044 last week as expected, the retreat from there suggests the wave (v) from 1.5983 could have ended there and consolidation with downside bias is seen for correction to 1.6338 and a daily close below there would add credence to this view and bring further fall to 1.6200, then 1.5983.

Our preferred count on the daily chart is that the major decline from 2.1162 top (9 Nov, 2007) is a 5-waver with wave 1: 1.9337, 2: 2.0399, extended wave 3 has ended at 1.3500 and wave 4 is unfolding with A: 1.4986, B: 1.3655 and impulsive wave C is sub-divided into (i): 1.5068, (ii): 1.4398, (iii): 1.6745, (iv): 1.5983 and wave (v) has possibly ended at 1.7044.

Below 1.5983 support would confirm this wave C as well as larger degree wave 4 has ended at 1.7044, then further fall to 1.5802 support and then 1.5690 (38.2% Fibonacci retracement of entire rise from 1.3500 to 1.7044).

On the upside, expect recovery to be limited to 1.6600-1.6650 and renewed selling should emerge below 1.6745 and bring further fall to aforesaid downside targets. Only a daily close above resistance at 1.6837 would risk stronger rebound to 1.6950 but resistance at 1.7044 should continue to hold.

Only above 1.7044 resistance would signal the final wave (v) is still unfolding and gain to 1.7200 would follow and possibly towards 1.7528 (50% projection of wave (i) to (iii) measuring from wave (iv) tough) but this wave (v) as well as wave 4 should still falter below 1.7893 (61.8% projection) bring wave 5 selloff probably in Q4.

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 and break of support at 1.3500 (23 Jan 2009) would extend to 1.3300 but price should stay well above psychological support level at 1.3000.