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GBP/USD Elliott Wave Analysis Print E-mail
Elliott Wave Weekly | Written by Action Forex | Jul 23 13 10:23 GMT
GBP/USD – 1.5346

GBP/USD – Wave 4 is unfolding as a triangle and the (E) leg has possibly ended a 1.6380.

As the British pound has continued to surge after staging a strong rebound from 1.4814, adding credence to our view that fall from 1.5753 has formed a temporary low there and near term upside risk remains for test of 1.5390-95 (61.8% Fibonacci retracement of 1.5753-1.4814), however, reckon upside would be limited to 1.5475-80 and bring another decline later. Below Below 1.5250-60 would suggest top is possibly formed and bring weakness to 1.5190-00, then 1.5150-60, however, break there is needed to confirm and bring further fall towards support at 1.5028. Looking ahead, a daily close below there is needed to signal the rise from 1.4814 has ended and bring further weakness to 1.5000, then towards 1.4900-10, break there would encourage for a retest of 1.4814 which is likely to hold on first testing. A drop below 1.4814 support would revive our bearish view that top has been formed at 1.6380 (wave (E) of 4) and bearishness remains for further fall to 1.4796 (61.8% projection of 1.6380-1.4832 measuring from 1.5753), then towards 1.4630-35 (1.618 times projection of 1.6380-1.5630 measuring from 1.5845), however, oversold condition should limit downside to 1.4600 and price should stay above psychological level at 1.4500.

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 a triangle as labeled in the attached daily chart with (A) leg of 4 ended at 1.7044, followed by (B) leg at 1.4228 an another 3-legged wave (C) ended at 1.6747, the complex (D) leg ended at 1.5268 (ABC-X-ABC), the subsequent rebound to 1.6380 is treated as the (E) leg, the sharp retreat from there suggests top has possibly formed, i.e. wave 4 also ended there, early breach of indicated support at 1.5234 adds credence to this count and weakness towards 1.4630-35 (1.618 times projection of 1.6380-1.5630 measuring from 1.5845) would be seen but reckon 1.4500 would hold on first testing.

On the upside, a daily close above resistance at 1.5530-35 would risk a stronger rebound to 1.5600, however, price should falter well below said resistance at 1.5753 and bring another selloff in late Q3.

Recommendation: Sell cable again at 1.5475 for 1.5260 with stop above 1.5575


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 i of 5 ended at 1.4228 and wave ii should falter below 1.6500 and bring another decline. Below 1.4228 would extend weakness to 1.3800 and break of support at 1.3500 (23 Jan 2009) would bring further fall to 1.3300, however, price should stay well above psychological support level at 1.3000.


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