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 292009

We got the dip to 1.5768 and a strong rally that has reached 1.5980 at the time of writing. I think there is a chance for some selling at 1.6003, but the bigger resistance lies at 1.6079. From one of these two places, look for a sizeable move lower.

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 132009

GBP 13Aug09
All I can say just now is we got a nice 250 pip rally from the 1.6395 level, and that more than makes up for some of the opportunity lost on the way down. Also observe how nicely the Pound was pushed back by over 50 pips from the 61.8% retracement level on the recovery.