GBPUSD 26th August, 2015

Cable unfolded sharply towards the downside as expected under the alternate count and both targets were reached and exceeded.

We are updating the main count according to the latest price action and providing an alternate count which focuses on the short term view. Calculating targets for fourth waves can never be done with confidence, since Cable`s fourth waves always tend to fall short of their targets.

However, in this case we are focusing on the short term because of three main points:

1- Wave 2 was a shallow correction and according to the “rule of alternation” which Cable fail to respect frequently, a fourth wave should be expected to be a pronounced retracement.
2- So far, wave four is yet to reach the common Fibonacci ratio of fourth waves and that suggest along with the third point that wave 4 has more to offer.
3- From a time prospective, wave 4 is shorter than wave 2.

As always we will wait for either count`s confirmation point to be reached to determine the highly probable count.


Main Hourly Count

– Invalidation Points: 1.5682 — 1.5452
– Confirmation Point: 1.5510
– Upwards Targets: 1.5555 — 1.5586
– Wave number: iv orange
– Wave structure: Corrective
– Wave pattern: Zigzag

Alternate Hourly Count

– Invalidation Point: 1.5510
– Confirmation Point: 1.5450
– Downwards Target: 1.5432
– Wave number: iv orange
– Wave structure: Corrective
– Wave pattern: Expanded flat

Elliott Wave chart analysis for the GBPUSD for 26th August, 2015. Please click on the charts below to enlarge.

Main Daily Wave Count

This count expects that primary wave B maroon is complete and that primary wave C maroon is unfolding towards the downside.

Within wave C maroon intermediate wave (1) black is complete as an impulse labeled minor waves 1 through 5 blue and intermediate wave (2) black might be complete as well and that intermediate wave (3) black has started unfolding downwards.

Within wave (1) black, wave 2 blue unfolded as a zigzag structure labeled minute waves a, b and c pink.

Wave 3 blue unfolded as an impulse labeled minute waves i through v pink.

Wave 4 blue unfolded as a triangle labeled minute waves a through e pink.

Intermediate wave (2) black unfolded as a zigzag labeled waves A, B and C blue.

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

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

Within intermediate wave (3) black it is expected that wave i pink is complete and that wave ii pink is likely complete and wave iii pink might be at its early stages.

Wave ii pink unfolded as a double zigzag labeled waves (w), (x) and (y) green.

This count would be initially confirmed by movement below 1.5424 and the final confirmation point is by movement below 1.5330.

At 1.5223 wave iii pink will reach equality with wave i pink and at 1.5853 wave iii pink will reach 1.618 of wave i pink.

This count would be invalidated by movement above 1.5932 as wave ii pink may not retrace more than 100 % of wave i pink and it should be noted that the invalidation point will be moved to the end of wave ii pink once we have confirmation on the daily chart that wave iii pink is underway.

Main Hourly Wave Count

This count expects that wave C blue and therefore intermediate wave (2) black might be complete and that intermediate wave (3) black has started unfolding towards the downside.

Within intermediate wave (3) black, it is expected that wave i pink is complete and wave ii pink might be complete and wave iii pink is at its early stages.

Wave ii pink unfolded as a double zigzag labeled waves (w), (x) and (y) green.

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

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

Wave a orange unfolded as an impulse labeled waves 1 through 5 purple.

Wave c orange unfolded as an impulse labeled waves 1 through 5 purple.

Wave 1 purple unfolded as a leading diagonal labeled waves (1) through (5) aqua with each wave within that leading diagonal unfolding as a zigzag correction. It is worth noting that within wave (3) aqua wave C failed to exceed the high of wave A.

Wave 4 purple unfolded as a triangle labeled waves (A) through (E) aqua.

This count expects that wave iii pink is at its early stages with wave (i) green unfolding downwards as an impulse labeled waves i through v orange with wave i through iii orange complete and wave iv orange is underway.

As far as MACD study goes, hourly MACD is exhibiting signs of a bullish divergence as MACD registered lower lows and price action failed to follow suit and it did not register a lower low and in the process a bullish divergence is formed.

This count would be confirmed by movement above 1.5510.

At 1.5555 wave iv orange will reach 0.382 of wave iii orange and that is the common target for the completion of fourth waves and at 1.5586 wave iv orange will reach 50 % of wave iii orange.

This count would be invalidated by movement above 1.5682 as wave iv orange may not enter the price territory of wave i orange. As well, this count would be invalidated by movement below 1.5452 as within a zigzag correction no B wave may retrace more than 100 % of its A wave.

Alternate Hourly Wave Count

The only difference between both main and alternate counts is within the subdivisions of wave iv orange.

This count expects that wave iv orange is unfolding as an expanded flat correction labeled waves A, B and C purple with wave A purple complete and wave B purple is underway.

This count would be confirmed by movement below 1.5450 instead of the low at 1.5452 since wave B purple has to retrace more than 105 % of wave A purple to conclude that wave iv orange is unfolding as an expanded flat correction.

At 1.5432 wave B purple will reach 1.382 of wave A purple which is the common target for the completion of B waves within expanded flat corrections.

This count would be invalidated by movement above 1.5510 as within wave B purple no b wave may retrace more than 100 % of its A wave.

Food For Thought:

    The daily MACD has been hovering around the zero line for more than a few sessions, this behavior is typical of triangles, Even though it is early to judge such a triangle, this scenario expects that wave B blue within wave (2) black is underway as a triangle and that wave C blue is at its very early stages. Since this view expects upwards movement very similar to what the alternate count expects, we will keep track of this count and present it when/if it has higher probabilities.

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