Just a few days ago, on 27 May precisely, when the GBP/USD was at 1.5983, Wave Times suggested that according to the Elliott Wave Principle, the GBP/USD or Sterling Pound was vulnerable as it approached the prior fourth wave level of 1.6670. Yesterday, the GBP/USD reached 1.6671, just a whisker short of the elliott wave target, and embarked on a sell-off that even took me by surprise. We saw a low of 1.6208 within 24 hours when some GBP supportive numbers allowed for a rebound. What we are interested to know right now is whether this sell off marks the beginning of the move to the low 1.30s as suggested in Wave Times in its current medium term update of 27 May 2009.
My response is that it is not easy to kill a raging bull. So allow for several sessions of back-and-forth moves, during which we could dip to 1.5920. So far, we have seen a 50% pull-back of the initial wave down from 1.6671 to 1.6208. A 61.8% recovery lies at 1.6487. See what happens there. If we get a fast sell off to 1.5920 from near 1.6490, then we can gain in confidence that the move has actually begun, and so look to sell decent corrections afterwards. In any case, traders following elliott wave analysis would already be rubbing their hands in glee after yesterday’s move. We will monitor GBP/USD closely, and give you current updates when anything significant happens.