Aug 212011

The Medium Term Outlook for the GBP/USD using Elliott Wave analysis is best figured out by starting your query from the longer term chart. A clear five wave decline from 2007 ended in 2009. That decline is being corrected in a 3 wave pattern, ABC. We seem to be in Wave C at the moment, and it will be invaluable information to the trader/investor/corporate treasurer to know in advance where wave C might end, and what will happen then. The three charts presented here shows you the way.
I have tentatively posted my expectation for the move to finish at 1.7010/1.7070 after which we should see a huge move down, perhaps back all the way to 1.4850 area. Keep an eye on WaveTimes as we will fine tune the terminal points as we get nearer the said targets. Your immediate clue is we are going up now, perhaps to a new high for this year, but just when you think it will keep going up, things will suddenly take a turn for the worse. Be prepared!

Jul 262011

Just about 5 weeks ago, while discusing the GBP/USD outlook, I pointed out that a leading bank was calling a head-and-shoulders top in the Pound, and they had gone short at 1.6133 with a stop at 1.6305. From an Elliott Wave Principle point of view, it did not seem right. By the evening of 23rd June, I was kicking myself for having stuck my own neck out on this matter, because clealy the GBP/USD has broken its neckline and going down rapidly. By 12th July, it had reached a low of 1.5780. Well, in the long run, everyone is right. But many of us also die! The GBP has come roaring back, vindicating the view that what finished there was not a head-and-shoulders formation, but some other beast. Who cares now, anyway. SOme of us have lost money on other trades in the meanwhile, right? However, there is a lesson for you here. Far too often, analysts tend to label a formation as a head and shoulders top, and how nice it would be if they applied some Elliott Wave brush on that picture.. maybe a different image will show up!

Jun 222011

A leading bank and an active player in the FX market has gone short in GBP/USD at 1.6133 with a stop at 1.6305. Why? It is because they have spotted a head and shoulders formation! Over the years I have seen hundreds of ‘potential’ head and shoulders that trap traders into getting short at all the wrong levels. Now this particular formation may well work, and I would definitely get my eyes examined again for not seeing something so clear (!) if the Pound collapses..but I would rather spend that money getting my eyes checked than throwing it to the market in this instance.. you get my drift?

Anyway, a downmove to 1.6035 is definitely possible, but I will be surprised if we dont get a recovery from somewhere there, and if it moves back above the so called neckline, it is going to cause some people to revisit their charts. I certainly will revisit them if the GBP/USD collapses below 1.6000

Aug 082010

Are we going to see a test of 1.6170 directly? and If we do get there, will we get a 10-big figure decline from there? These are some of the questions that the Wavetimes watcher must be having. Elliott Wave Analysis of GBP/USD suggests that so long we we stay above 1.5915 now, there is a reasonably good chance for a direct move to 1.6160-70. And if we do reach there without going first to below 1.5700, then the 1000 point decline will be delayed. The delay is a good thing because when the sell off starts from a higher level, it will still go towards 1.5130, which means the move will be greater than 1000 points by the extent the GBP/USD goes above 1.6170!  I will of course try and alert you as the topping signs show up. But for the time being, I think we should play it sensibly and refrain from being short until an evidence of a top is in place.