GBPUSD – 2nd January, 2014 – Monthly

Over the last month the pound unfolded towards the upside as expected and both daily and weekly specified targets were reached and exceeded with the weekly target being exceeded by 27 pips.

We are updating the main count according to the latest price action and an alternate count will be presented once price action suggests an alternate count.

Main Daily Count

– Invalidation Point: 1.6604
– Confirmation Point: 1.6219
– Downwards Target : —
– Wave number: 5 maroon
– Wave structure: Motive
– Wave pattern: Impulse / Ending diagonal

Elliott Wave chart analysis for the GBPUSD for 2nd January, 2014. Please click on the charts below to enlarge.

Main Weekly Wave Count

01-gbpusd02jan14weekly

01-gbpusd02jan14weeklymacd

This count expects that waves 1 through 3 maroon are complete and that wave 4 maroon is likely complete as a triangle in a sideways manner.

Wave 3 maroon extended into waves (1) through (5) black.

Wave 4 maroon unfolded as a triangle labeled waves (A) through (E) black.

Wave (A) black unfolded towards the upside as a zigzag labeled waves A, B and C blue.

Wave (B) black unfolded towards the downside as a zigzag labeled waves A, B and C blue with wave C blue unfolding as a clear five wave structure labeled waves i through v pink.

Wave (C) black unfolded towards the upside as a zigzag labeled waves A, B and C blue.

Wave (D) black unfolded towards the downside as a double zigzag labeled waves W, X and Y blue with wave W blue unfolding as a zigzag labeled waves a, b and c pink with wave a pink unfolding as a leading diagonal labeled waves (i) through (v) green and wave X blue unfolded as a zigzag labeled waves a, b and c pink. Wave Y blue unfolded as a zigzag labeled waves a, b and c pink.

Wave (E) black unfolded towards the upside as a zigzag labeled waves A, B and C blue and this count expects that wave 5 maroon is starting to unfold towards the downside.

As far as MACD study goes, the presence of a hidden divergence between the end of wave (C) black and the end of wave (E) black increases the confidence in the main count and suggests that a downtrend reversal is quite immanent.

This count would be initially confirmed by movement below 1.5854 and the final confirmation point is at 1.4813.

We will be able to specify targets within wave 5 maroon once wave 5 maroon starts to subdivide towards the downside.

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 and it is worth mentioning that the invalidation point will be moved to the end of wave (E) black once we have confirmation on the weekly chart that wave 5 maroon is starting to unfold towards the downside.

Main Daily Wave Count

01-gbpusd02jan14daily

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

Within wave (E) black wave A blue unfolded as an impulse labeled waves i through v pink.

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

Wave B 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.

Wave C blue unfolded as an impulse labeled waves i through v pink.

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

Wave iv pink unfolded as a triple zigzag labeled waves (w), (x), (y), (x) and (z) green and wave v pink unfolded as an ending diagonal.

As far as Japanese candlesticks study goes, the presence of a “Bearish Engulfing” pattern augments the main count`s view that the uptrend is mature and that wave 5 maroon is starting to unfold towards the downside as the “Bearish Engulfing” pattern is a bearish reversal pattern.

This count would be initially confirmed by movement below 1.6219.

This count expects wave 5 maroon to be at its early stages and we will be able to calculate targets within wave 5 maroon once wave maroon starts to unfold towards the downside.

This count would be invalidated by movement above 1.6604 as within wave 5 maroon no second wave may retrace more than 100 % the length of the first wave.

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