This week, we will go over Cable`s next probable movement and explore GBPUSD`s highly likely Elliott wave counts.
Cable has been clearly trading in a sideways manner from late October 2016. Since the basic technical analysis rules suggest trend continuation following a sideways consolidation, we will focus on support and resistance key levels.
For the bearish view to remain intact, Cable would have to trade below 1.2707. Movement above that key level would increase confidence in trend reversal and bullish views.
Main count expects Cable to unfold downwards sharply within a third wave while the first alternate count expects Cable to unfold upwards to complete a second wave correction.
On the other hand, the second alternate count -presented on a daily chart- expects Cable to unfold in a sideways manner before resuming its downtrend.
As always, we will wait for either count`s confirmation point to be reached to determine the highly probable count.
– Invalidation Point: 1.2549
– Confirmation Point: 1.2383
– Downwards Targets: 1.2361 — 1.2260
– Wave number: 3 purple
– Wave structure: Motive
– Wave pattern: Impulse
– Invalidation Point: 1.2707 — 1.2383
– Confirmation Point: 1.2549 — 1.2583
– Upwards Targets: 1.2617 — 1.2628
– Wave number: (ii) green
– Wave structure: Corrective
– Wave pattern: Double zigzag
Elliott Wave chart analysis for the GBPUSD for 17th February, 2017. Please click on the charts below to enlarge.
Main Wave Count
This count expects that within wave C maroon waves (1) through (4) black are complete and that intermediate wave (5) black is unfolding downwards.
Within wave (5) black waves 1 and 2 blue are highly likely complete and wave 3 blue has started unfolding downwards.
Wave 1 blue unfolded as an impulse labeled i through v pink.
Wave v pink unfolded as an ending diagonal labeled waves (i) through (v) green with wave (v) green being a truncated fifth wave.
Wave 2 blue is seen as a double zigzag labeled waves w, x and y pink.
Within wave 3 blue, it is likely that wave i pink is starting to unfold downwards with waves (i) and (ii) green complete and wave (iii) green is underway.
Wave (ii) green unfolded upwards as a zigzag correction labeled waves a, b and c orange.
Within wave (iii) green it is likely that waves i and ii orange are complete and wave iii orange is starting to extend downwards.
Wave i orange unfolded as a leading diagonal labeled waves 1 through 5 purple.
Wave ii orange unfolded as a zigzag labeled waves A, B and C purple.
Within wave iii orange it is expected that waves 1 and 2 purple are mature and that wave 3 purple is at its very early stages.
Wave 1 purple unfolded as an impulse labeled waves (1) through (5) aqua and it is worth noting that wave 1 purple does not provide the best fit.
Wave 2 purple unfolded as a zigzag labeled waves (A), (B) and (C) aqua.
This count would be confirmed by movement below 1.2383.
At 1.2361 wave 3 purple would reach equality with wave 1 purple and at 1.2260 wave 3 purple would reach 1.618 of wave 1 purple.
This count would be invalidated by movement above 1.2524 as within wave 3 purple no second wave may retrace more than 100 % of its first wave.
First Alternate Wave Count
This count expects that wave (ii) green is incomplete and that wave (ii) green is unfolding upwards as a double zigzag labeled waves w, x and y orange with waves w and x orange complete and wave y orange is unfolding upwards.
Wave w orange unfolded as a zigzag labeled waves A, B and C purple.
Wave x orange unfolded as a zigzag labeled waves A, B and C purple.
This count would be initially confirmed by movement above 1.2549 and final confirmation point is at 1.2583.
At 1.2617 wave y orange would reach equality with wave w orange and at 1.2628 wave (ii) green would reach 0.786 of wave (i) green.
This count would be invalidated by movement above 1.2707 as wave (ii) green may not retrace more than 100 % of wave (i) green and as well, this count would be invalidated by movement below 1.2383 as within wave (ii) green wave x orange may not retrace more than 100 % of wave w orange.
Second Alternate Wave Count
This count is presented as the series of first and second waves discussed on the main hourly count demand sharp downwards movement.
However, it is quite possible that wave (4) black is incomplete and that wave (4) black would continue to unfold in a sideways manner to complete a triangle labeled waves A through E blue with waves A, B and C blue complete and wave D blue has started unfolding downwards.
This count would be confirmed by movement below 1.2346.
At 1.2320 wave D blue would reach 50 % of wave B blue and at 1.2226 wave D blue would reach 0.618 of wave B blue.
This count would be invalidated by movement above 1.2776 as within a contracting triangle wave C blue may not exceed the end of wave A blue and it is worth noting that the invalidation point would be moved to the end of wave C blue once we have confirmation on the daily chart that wave D blue is underway. As well, this count would be invalidated by movement below 1.1986 as within a contracting triangle wave D blue may not exceed more than 100 % of wave B blue.