GBPUSD is nicely recovering from the 1.300 support zone, where a higher degree wave 4) correction found its base. Current sharp rally we now labelled as sub-wave A of a three-wave recovery which may unfold within higher degree wave 5). In this case wave 5) is expected to unfold three (A-B-C) waves, because we are observing an EW ending diagonal of a higher degree on higher time frame charts. As we know an EW ending diagonal has a 3-3-3-3-3 structure. That said, possible resistance for sub-wave A of 5) can be seen around the 1.315/1.319 zone.
GBPUSD, 1h
An ending diagonal is a special type of pattern that occurs at times when the preceding move has gone too far too fast, as Elliott put it. A very small percentage of ending diagonals appear in the C wave position of A-B- C formations. In double or triple threes, they appear only as the final “C” wave. In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement.
- structure is 3-3-3-3-3
- a wedge shape within two converging lines
- wave 4 must trade into a territory of a wave 1
- appears primarily in the fifth wave position, in the C wave position of A-B- C and in double or triple threes as the final “C” wave
Ending diagonal pattern:
