Quite frequently we come to the office in the morning and see that a big move has happened overnight. Our first instinct is to join the move on any pull back. However, it pays to visit the short term charts before jumping in.
Look for a five wave pattern, and figure out WHERE we are in that sequence. Today’s chart of GBP/USD shows a neat little Elliott Wave pattern that a short term trader can put to use. The 2nd wave was a simple zig-zag and finished just above the 61.8% retracement level. The 3rd wave was SHARP, which is in keeping with that wave’s personality. The 4th wave covered 38.2% of the 3rd wave, and we are in an extending 5th. The internal waves of this tiny 5th shows that its own mini 3rd wave has extended! So we are probably not too far away from an intra-day low. Of course, no one can say where an extension will finish. It can just keep going lower. However, once the extension is finished, look out for a sharp recovery that will take you back to the 1.5075 levels. Good luck.
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