Sep 302009

GBP 1 Oct 2009Nothing works like Elliott Wave analysis when it works!  The Pound has dropped 200 pips already. While we could expect more weakness ahead, I would like to be prepared with a plan of action should we see a strong correction from around here. ( I am not saying this correction WILL happen. Just getting ready with a plan IF it happens).

Take a look at the chart. Suppose the first wave finished at 1.5944. We are then witnessing an irregular B wave that made a new low below 1.5944. The ensuing “C” wave will take us above the top of the “A” wave by a factor of the distance between the end of the first wave and the bottom of the B wave. All this is explained in the chart. Once we finish the correction, we should sell again. Enjoy!

As always, it is good to have an alternate count! So here goes…

GBP 1 Oct 2009a

Sep 302009

GBP 30 Sep 09We have come a long way in the Pound. Is the Sterling going to turn down at all? From an Elliott Wave perspective, I still think Cable is going to come off once ALL the remaining stops are done. This should happen pretty soon. The diagonal triangle that you see in the 10-minute chart could well be the last formation of the move. Once we move below 1.5990 now, there will be very few buyers.

RamkiGBP 30 Sep 09a

Sep 272009

I would like you to start with the medium-term update of Sterling Pound posted on 27 May 2009.  In that post, I had suggested that we will top out close to 1.6670 and decline to 1.3300 area. The Pound stopped 9 pips below that at 1.6661 and sold off to 1.5803. On the next pull back, we attempted to sell and lost 20 pips. I informed you that I have not changed my medium term view, but we should allow for further strength to fresh highs to 1.6922. Then, on 4th August, we continued to remain bullish for a move to 1.7105 but maintained we will see a move back to 1.5800 (perhaps a lot lower!) . The high was seen on 5th August, at 1.7042, and we have closed last Friday at 1.5952.  (If you wish to see how Elliot Wave Analysys was useful on the way UP, then you should start off by reading Elliott Wave Magic ).

Now, back to the future. We are quote close to the 1.5800 target and basically I believe we should now don our Bear Hat again and wait for a low risk level to sell for a potential move to 1.3300. After all, Mervyn King did say that the pound’s weakness was ‘helpful’.  Now, Chancellor Darling tried to moderate that sentiment by saying they had no policy to ‘deliberately’ weaken the pound, but one hardly believes he will think a waker pound will be ‘unhelpful’ 😉

From a technical point of view, what should one do?  If we first get to 1.5800, then we will have to sit on our hands a few more sessions because we want to SELL on a pull back. But suppose there were already some weak shorts, and Darling’s statements upsets them?  They might start buying back their shorts and trigger a few stops. Then I think anything close to 1.6090 is where we should start building a core short position. I will try and post regular updates for the next few weeks (‘coz I will be holidays again in November). The key point to remember is when we know the trend has begun, that is when we have to be brave. Enjoy!


Aug 102009

GBP 10Aug09

The Sterling Pound turned quite abruptly from 1.7042, and has already moved below 1.6600. There is some mild support around 1.6563, and more at 1.6515. Because we had an extending third wave (at 2.618 times the first), we should be wary of a correction back to at least 1.6715/20. This could come from either 1.6565 or 1.6515 levels. HOwever, I would not be happy to trade any big size from the long side, given the fact we have likely placed a significant top already and a move back to 1.5800 ( or a lot lower: see earlier comments) is anticipated in the big picture. Be careful below 1.6400 as there is a key support down there.

Aug 062009

So you are wondering if GBP/USD has posted a premature top at 1.7042? What is the short term outlook for Sterling Pound? I would delay the answer to the first question until after we see the speed and extent of the anticipated recovery from between 1.6740 and 1.6760. If you have been short from above, then you should take some profits down there and reinstate on the recovery. If you are looking to play from the long side from 1.6755, then place stops below 1.6730.
Good luck. Ramki

Aug 042009

GBP 4aug09a
It is almost two months since I wrote that the Sterling Pound’s first target is 1.6922. At that time, the currency was trading at 1.6371. We have already seen a high of 1.7004, and some traders might be itching to sell ! I would urge them to be just a bit more patient. Most of us have this overpowering desire to get on board a trade before it becomes too late. And shortly after the order is done, we start wondering if we had got into the market a wee bit too soon. The charts suggest we could take a look at 1.7105 and so it might be a good idea to wait for that level. GBP 4aug09b Later on, potentially from 1.7155 (but we will decide the turn level as we go) lookout for a significant decline. That decline will target 1.5800 as a first step, but if I have not judged too badly, we could see an eye popping sell off to much lower levels. I have no desire to shoot myself in the foot so early in the race, but neither am I loath to confess that I adore the adulation from fans when I get things right ahead of others!

Jun 102009
Sterling Pound enters its 5th wave within a bigger third wave

Sterling Pound enters its 5th wave within a bigger third wave

I lost about 20 pips in learning that the GBP/USD remains in its third wave, and is currently in the fifth wave position within the third. Like every other third wave, this one is not afraid to show the wave analyst who is the boss. We prematurely concluded that the 200% move wave sufficient for the 3rd wave, when all that it has done was to complete a giant 3rd of the third. Buddy, I still have my fifth wave of the third, and that tip will cost you 22 pips, thank you!

Where is the earliest target for this fifth wave of the third? If we consider that the fifth wave could be equal to the first wave, then the target is 1.5797+0.1125= 1.6922. Now, as a battle scarred veteran, I know there are no guarantees. But one mistake I am not going to make this time is to try and sell the Pound before it reaches 1.6922. Have I changed my medium-term forecast for the Pound?  Not at all. I made a mistake about where the 3rd wave (actually it is the “C” wave!) finished. And it did make a fantastic move earlier, down all the way from 1.6661 to 1.5797, and was well worth the previous effort. As I keep saying, we should remain faithful to our counts until proved wrong. When we make a mistake, the cost is small. When we get it right, the rewards are handsome. Enjoy! Ramki

Related GBP (Sterling Pound) Links:
Sterling Pound in fifth wave, confounds bears
Low risk trade idea: GBP/USD Sterling pound
Elliott Wave GBP/USD Live – Elliott Wave GBP/USD today 4 June 2009

Jun 092009
GBP/USD technical update 9 June 2009

GBP/USD technical update 9 June 2009

Although the GBP/USD dipped someway below my preferred support at 1.5920, the drop has all but reinforced my view that we could be set up for a significant down move in the coming weeks. Anyway, for the short term trader, a low-risk trading opportunity in GBP/USD is close at hand. As you can see from the chart here, the Sterling Pound (GBP/USD) has retraced nearly 50% of its sell off from 1.6661 to 1.5800 area. You will also notice that there is a daily low posted at 1.6240 a few days ago. That low, plus the 50% fibonacci level being close at hand, and the speed of the recovery, and a few other clues that I can’t explain in detail today, are all suggesting that if we can risk 20 pips at 1.6230, we can be rewarded handsomely. The short term outlook for Sterling Pound is that the rally from the 1.5800 level is close to exhaustion, and we should see it go back lower from somewhere near 1.6240. So go for it! No risk. no reward, right?