Elliott Wave - USDX, GBP/USD

Hello Elliott Wave traders.

Gold went higher yesterday, getting above $840 before quickly returning to $825 support. There were many overlaps in the last few days, so no clear trend at all is seen. Small profits are the winners here. There is also something similar on the aussie chart; prices just hit the trend line mentioned yesterday. We can expect some buyers in this area with stops below the trend line (look to the charts posted from yesterday).

For today we prepared two possible wave counts on the dollar index chart, which should be the right one to look at to find the right way on some major pair moves. We have also included the wave count on cable which is showing us possible bottom, and higher prices in the next few trading days.

Today's Charts

USDX

Below is our first triangle wave count, where the sub-waves are 3-3-3-3-3. This count is valid if the prices continue to new highs in the next week or two. On the chart we labeled the first zig-zag in wave A and also in wave B, which has ended above the wave three high. In this case will this be running triangle. We labeled the current live structure with red square. If we are on the right track, then we should see prices around the lower trend line probably in the next week. Price should not move lower off wave A (76.00), otherwise it will this wave count be invalidated. For this case we made another wave count.

Basic chart

Live chart

Below is the second wave count, where the blue wave 5 is is already complete above 77.50. In this case the market has already made last five waves up after the zig-zag move in blue wave 4. Wave IV of 5 is a little bit larger then usually if we compare it with  wave II, but still valid. The minimum target of the traders those are already short is around 76.25 where would wave III be equally to wave I. Wave 3 should not be shorter than wave 1, and this is why the area around 76.25 is labeled. The likely target of wave III would be somewhere around 75.50.

GBP/USD

There is a possible diagonal triangle on 2 hour chart which has been developing since August 22nd after the clear zig-zag move in black wave iv. The structure of the MACD is signaling for a very powerful divergence, which should push prices higher in the near term. This kind of divergence is very common when the diagonal triangle appears. Traders should be very patient with the long positions; the market is still actively trading in this temporary down channel, so any move to new lows could be here very fast. It will be good to wait on a break through the upper trend line around 1.8330 for confirmation. Stops should be below 1.8300.

Traders remember; always make the strategy for each trade!! See you next week.
Grega.

Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com

TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174.

The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC.