GBPUSD: Consolidation vs. Downtrend Resumption!

Cable has been consolidating from late October 2016. Since the basic technical analysis rules suggest trend continuation following a sideways consolidation, we continue to focus on Elliott waves support and resistance key levels.

For the short term, the main count expects Cable to unfold in a sideways manner before resuming its downtrend while the first alternate count expects Cable to push downwards to complete a third wave impulse. Finally, the second alternate count expects Cable to remain locked in a sideways consolidation for a few weeks to come.

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

Main Count

– Invalidation Point: 1.2241 — 1.2392
– Confirmation Point: 1.2309
– Upwards Targets: 1.2331 — 1.2359
– Wave number: iv orange
– Wave structure: Corrective
– Wave pattern: Zigzag

Alternate Count

– Invalidation Point: 1.2480
– Confirmation Point: 1.2261
– Downwards Targets: 1.2236 — 1.2194
– Wave number: iii orange
– Wave structure: Motive
– Wave pattern: Impulse

Elliott Wave chart analysis for the GBPUSD for 2nd March, 2017. Please click on the charts below to enlarge.

Main Wave Count


N.B.: This count is presented on the 8-hours bar chart for clarification purposes.

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 double zigzag correction labeled waves w, x and y orange.

Wave x orange unfolded as a triangle labeled waves A through E purple.

Within wave (iii) green it is expected that waves i through iii orange are mature and that wave iv orange is underway.

This count would be confirmed by movement above 1.2309.

At 1.2331 wave iv orange would reach 0.382 of wave iii orange and at 1.2359 wave iv orange would reach 50 % of wave iii orange.

This count would be invalidated by movement above 1.2392 as wave iv orange may not enter the price territory of wave i orange and as well this count would be invalidated by movement below 1.2241 as within wave iv orange no B wave may retrace more than 100 % of its A wave.

First Alternate Wave Count


N.B.: This count is presented on the 8-hours bar chart for clarification purposes.

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

This count expects that wave iii orange has more to offer downwards as within wave iii orange waves 1 through 4 purple are complete and wave 5 purple is unfolding downwards.

This count would be confirmed by movement below 1.2241.

At 1.2236 wave iii orange would reach 1.382 of wave i orange and this target does not provide a trading opportunity. However, we have been following this target for a couple of sessions and it remains a strong support level. As well, at 1.2194 wave iii orange would reach 1.618 of wave i orange.

This count would be invalidated by movement above 1.2309 as within wave 5 purple no second wave may retrace more than 100 % of its first wave.

Second Alternate Wave Count


N.B.: This count is presented on a 12 hours chart for clarification purposes.

This count expects that wave (4) black is incomplete and that wave (4) black continues 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 might be complete as well and that wave E blue has started unfolding upwards.

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

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

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

This count would be confirmed by movement above 1.2570.

At 1.2517 wave E blue would reach 0.382 of wave C blue and at 1.2601 wave E blue would reach 50 % of wave C blue.

This count would be invalidated by movement above 1.2707 as within a contracting triangle wave E blue may not exceed the end of wave C blue. 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. It is worth noting that the invalidation point would be moved to the end of wave D blue once we have confirmation on the daily chart that wave E blue is underway.

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