GBPUSD – Downwards Drift Continuation vs, Uptrend Reversal

This week the pound unfolded towards the downside reaching and exceeding both specified targets. However that downwards movement did last longer than expected.

We are modifying the main count according to the latest price action and as well presenting an alternate count which expects the pound to unfold towards the upside in a three wave structure.

Focusing on the short term picture can be valuable at this stage. As always we will be using each count`s invalidation point to determine the highly probable count.

8-Hours Main Count

– Invalidation Point: 1.6252 — 1.6726
– Confirmation Point: 1.6612
– Downwards Targets : 1.6605 — 1.6538 — 1.6471
– Wave number: (ii) green
– Wave structure: Corrective
– Wave pattern: Zigzag

8-Hours Alternate Count

– Invalidation Point: 1.6612 — 1.7043
– Confirmation Point: 1.6726 — 1.6823
– Upwards Target : 1.6875
– Wave number: v pink
– Wave structure: Motive
– Wave pattern: Ending diagonal

Elliott Wave chart analysis for the GBPUSD for 21st February, 2014. Please click on the charts below to enlarge.

Main Wave Count

01-gbpusd21feb14daily1

01-gbpusd21feb14daily1macd

This count expects that wave B maroon is unfolding as a triangle labeled waves (A) through (E) black with waves (A) and (B) black complete and wave (C) black is unfolding towards the upside.

Wave (C) black is unfolding towards the upside as a zigzag labeled waves A, B and C blue with waves A and B blue complete and wave C blue is underway.

Wave C blue is unfolding as an impulse labeled waves i through v pink with waves i through iv pink complete and wave v pink is unfolding towards the upside.

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

Wave (iv) green unfolded as a zigzag labeled waves a, b and c orange.

Following the completion of wave iii pink, wave iv pink unfolded as a zigzag labeled waves (a), (b) and (c) green with wave (c) green unfolding as an impulse labeled waves i through v orange.

Wave v pink is unfolding towards the upside likely as an ending diagonal with wave (i) green complete and wave (ii) green is unfolding towards the downside.

As far as MACD study goes, the recent price high failed to register a new high on MACD suggesting that the recent upwards movement is not accompanied with enough momentum and thus creating a divergence which is typical of a fifth wave.

This count would be confirmed by movement below 1.6612.

At 1.6605 wave (ii) green will reach 0.382 the length of wave (i) green and at 1.6538 wave (ii) green will reach 50 % the length of wave (i) green and at 1.6471 wave (ii) green will reach 0.618 the length of wave (i) green, however it should be noted that equality between waves a and c orange is at 1.6528 just below the 50 % retracement level for wave (ii) green.

This count would be invalidated by movement above 1.6726 as within wave c orange no second wave may retrace more than 100 % the length of the first wave and as well this count would be invalidated by movement below 1.6252 as wave (ii) green may not retrace more than 100 % the length of wave (i) green.

Alternate Wave Count

02-gbpusd21feb14daily1alt

This count expects that wave (ii) green is complete and that wave (iii) green is starting to unfold towards the upside.

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

This count would be initially confirmed by movement above 1.6726 and the final confirmation point is at 1.6823.

At 1.6873 wave v pink will reach equality with wave i pink.

This count would be invalidated by movement above 1.7043 as wave (C) black may not exceed the end of wave (E) black within a contracting triangle, as well this count would be invalidated by movement below 1.6612 as within wave a orange within wave (iii) green no second wave may retrace more than 100 % the length of the first wave.

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