British Pound Crosses Stuck In Corrective Ranges

GBPJPY
GBPCHF
GBPAUD

GBPJPY

Commentary - We maintain that a correction is underway that can not be considered complete until a rally through 212.39, although a test of the former 4th wave at 217.31 is possible. Near term we see two possibilities. One is that a triangle is unfolding as wave b of larger Y. In this case, a terminal thrust into 217.31 would complete the correction and give way to the larger downtrend. The other possibility is that the b wave ends up as a flat; under this count, price would come below 209.39 before a rally into the 217.00 area takes place. In summary, there is too much uncertainty right now to take a stand so we will wait for the selling opportunity near 217 (or higher).

Strategy - Flat

GBPCHF

Commentary - We wrote last week that 'expectations then are for a rally through at least 2.1809 and possibly a test of the former 4th wave at 2.2137.' The GBPCHF did rally but failed just shy of 2.1800. Still, a larger recovery seems reasonable, especially given that the pattern unfolding now looks like an inverse head and shoulders.

Strategy - Move to flat

GBPAUD

Commentary - We have been bearish this pair for a long time now and although we do expect price to continue declining longer term, a bigger bounce is probably due after one more low is registered (below 2.1689). The rally from 2.1689 is in 3 waves, which is why a new low is expected, but the decline will be in a 5th wave (in a bearish cycle from the November high at 2.3887), which is why we expect a bigger bounce to follow.

Strategy - Bearish, against 2.2739, EXIT after a decline below 2.1689 (our long standing target has been 2.0700…which is still possible)

DailyFX

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