GBPUSD – Is It Uptrend Continuation Or A Downtrend Reversal Time ?!

This week the pound unfolded towards the downside confirming the alternate count and the specified target was reached and exceeded by 5 pips.

The nature of the downwards movement was choppy in nature and that increases the confidence in the main count as the pound found a bottom very close to the specified Fibonacci level.

From now on, We will be discussing two confirmatory studies which reside outside the realm of Elliott wave analysis on a daily basis -MACD and Japanese candlesticks patterns-. The presence of these studies -when available- have an impact on the confidence of a given count.

We hope by adding these studies that it will prove beneficial for our members and please bear with us as we reach -together- the best presentation and full integration of these studies with our existing service. Your insight will help define and shape this new addition to the daily analysis.

8-Hours Main Count

– Invalidation Point: 1.6292 — 1.6747
– Confirmation Point: 1.6441
– Upwards Target : 1.6473 — 1.6586
– Wave number: C blue
– Wave structure: Motive
– Wave pattern: Impulse

8-Hours Alternate Count

– Invalidation Point: 1.6441
– Confirmation Point: 1.6292
– Downwards Target : 1.6243 — 1.6150
– Wave number: 5 maroon
– Wave structure: Motive
– Wave pattern: Impulse / Ending diagonal

Elliott Wave chart analysis for the GBPUSD for 6th December, 2013. Please click on the charts below to enlarge.

Main Wave Count

01-gbpusd06dec13daily1

01-gbpusd06dec13daily1macd

This count expects that wave (E) black and therefore wave 4 maroon are incomplete and that within wave (E) black waves A and B blue are complete and wave C blue is unfolding towards the upside.

Within wave C blue waves i through iv pink are complete and wave v pink is starting to unfold towards the upside.

Wave i pink unfolded as an impulse labeled waves (i) through (v) green.

Wave ii pink unfolded as a zigzag labeled waves (a), (b) and (c) green.

Wave iii pink unfolded as an impulse labeled waves (i) through (v) green.

Wave iv pink unfolded as a zigzag labeled waves (a), (b) and (c) green with wave (c) green unfolding as an ending diagonal labeled waves i through v orange.

As far as Japanese candlestick study goes, the formation of a “Spinning Top” by the end of Friday`s trading session at such position suggests the presence of indecision between bulls and bears and continuation of the uptrend which adds confirmation to the main count which expects a fifth wave starting towards the upside.

As far as MACD study goes, the presence of a hidden divergence -as indicated by the pink line on the MACD- within wave C blue between the ends of waves ii and iv pink highly suggests that an upwards reversal is imminent.

This count would be confirmed by movement above 1.6441.

At 1.6473 wave v pink will reach 0.618 the length of wave i pink and at 1.6586 wave v pink will reach equality with wave i pink.

This count would be invalidated by movement below 1.6292 as within wave v pink no second wave may retrace more than 100 % the length of the first wave, as well this count would be invalidated by movement above 1.6747 as wave (E) black may not exceed the end of wave (C) black within a contracting triangle.

Alternate Wave Count

02-gbpusd06dec13daily1alt

The alternate count expects that wave 4 maroon is complete and that wave 5 maroon is starting to unfold towards the downside.

Wave (E) black within wave 4 maroon unfolded as a double zigzag labeled waves W, X and Y blue.

Wave X blue unfolded as a flat correction labeled waves a, b and c pink with wave c pink unfolding as an impulse labeled waves (i) through (v) green and wave (iii) green unfolded as an impulse labeled waves i through v orange.

Wave Y blue unfolded as a zigzag labeled waves a, b and c pink.

Wave a pink unfolding as an impulse labeled waves (i) through (v) green.

Wave b pink unfolded as a running triangle labeled waves (a) through (e) green.

Wave c pink unfolded as an impulse labeled waves (i) through (v) green.

Within wave 5 maroon wave i pink is unfolding towards the downside likely as an impulse labeled waves (i) through (v) green with waves (i) and (ii) green complete and wave (iii) green is unfolding towards the downside.

Wave (i) green unfolded as a leading diagonal labeled waves i through v orange.

This count would be confirmed by movement below 1.6292.

At 1.6243 wave (iii) green will reach equality with wave (i) green and at 1.6150 wave (iii) green will reach 1.618 the length of wave (i) green.

This count would be invalidated by movement above 1.6441 as wave (ii) green may not retrace more than 100 % the length of wave (i) green and it should be noted that the invalidation point will be moved to the end of wave (ii) green once we have confirmation on the hourly chart that wave (iii) green is unfolding towards the downside.

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