May 112010

I would like to start by pointing to this link dated Septermber 27, 2009, where I had reiterated the bearish call for Sterling Pound, GBPUSD. Today, I was shown a research report from Morgan Stanley where they are going short the Pound here at 1.4850 with a stop at 1.5100 for a move down to 1.3500. That downside objective rang a bell ;-) , so I decided to take a fresh look at the Sterling charts. I have decided to publish two charts for your benefit. The first chart shows the down move from 1.6880 area is currently in its fifth wave. Thus, we are in the last wave down in the current cycle. However, we have to remember that any one impulse wave in a sequence will tend to extend. The question is, will this 5th wave extend?  Btw, isn’t it interesting to observe that when the 5th wave travelled 50% of the distance covered by the first 3 waves, it turned around and raced higher? (Of course, it was convenient that the $1 trillion rescue package was announced about the same time! But these technical levels seem to know in advance when the good news will arrive, don’t they?) Now the first chart above is actually the 3rd wave within the bigger 5th. To appreciate that, you have to look at this second chart.

After you look at this chart, you will realize that those who have placed their stop at 1.5100 looking for 1.3500 will be stopped out if this analysis is proved correct. Of Course, no one will know until later what is going to happen, and it is easy enough to come up with nice looking charts and comments. Yet, I felt compelled to place on record what I felt at this point in time. As a bonus, I am also giving you a third chart on GBP/USD. This looks at the 5th wave discussed at the top more closely. We could finish at 1.4403, or more likely at 1.4226. Then allow a recovery towards 1.5050 as a first step. We will then come down again, by which time some of the bearish sentiment will wear off. Later on we should go further up towards 1.5500 before the much bigger down move to 1.36 could start. We shall see. All of this will be in vain if we go directly lower towards 1.3600, but if that happens, we will start salivating for a much bigger recovery later on because a HUGE five wave move from 2.1161 would be close to its completion. Enjoy!

Apr 152010

After the Pound broke past the resistance at 1.5157, there was little to hold it back. The target appeared to be 1.5615/20 levels, and the attached two charts will testify why I felt like that. GBPUSD Elliott Wave Chart In fact, I had even emailed some of the old faithfuls this morning that the time for the bulls may be running short. However,  economic data in the form of consumer confidence has dealt a blow and we are already seeing a lot of selling and a test of 1.5360 is not far away.  In any case, if we get back to 1.5610 levels for any reason, there is ashort sell GBPUSD

 valid reason to take a punt on the short side, as always with an affordable stop.

Mar 302010

Now that the Sterling Pound has almost reached its short term objective above 1.5100, it is natural to wonder what next? If we break above 1.5110, then there is a chance to take a look at 1.5157, which marks a 61.8% retracement level of the prior drop. Selling near there is a low-risk trade. However, if we start coming off directly, then there is a small chance that we will get a recovery late tonight or tomorrow to retest the 1.5100/10  level before coming off. You can decide whether to sell at 1.5155 or at 1.5104 depending on whether we break higher directly, or if we come off quickly to 1.5050 levels first. Enjoy!

Mar 242010

After rallying back sharply to 1.5380,  the Pound has come off in what looks like a five-wave pattern. The final leg of these five waves is likley to be completed soon, and so we should get ready for a recovery back towards the previous fourth wave around 1.5110. So trade accordingly.short term outlook for gbpusd The prior low at 1.4780 offers key support, while even 1.4835/50 can hold up.

Mar 142010

Every now and then, the market will enter into a complex corrective phase. It is quite hard to forecast the degree of the complexity, and where the correction will end. All one can do is to take his/her chances at key levels. Right now  I see some resistance between 1.5220 and 1.5230. Assuming that this completes the correction, we will get back nicely into the bear trend. However,  be aware that if we rally back above 1.5235 AFTER coming down to around 1.5100 or lower, then we could actually be looking at 1.5420 or somewhere there by next week. Your clue comes from a very fast rally after dipping to 1.5090 or so. So be nimble. Ramki