Elliott Wave Analysis: GBPUSD Trading In A Temporary Correction 

 

Elliott Wave Analysis: GBPUSD Trading In A Temporary Correction

GBPUSD is trading in a three-wave rise, which we see it as only a temporary correction within a higher degree downtrend. That said, price can be trading in final stages of this correction as we can see sub-wave C of IV) approaching resistance zone. Also, current wave C is made from five-waves and is displaying qualities of an ending diagonal, which means a turning point can be around the corner, ideally around the 1.3219/1.3463 region.

GBPUSD, Daily

On the 4h chart we are observing final stages of an ending diagonal where another leg up is still missing. We expected another push up into wave C) of 5) towards 1.3100-1.3150 zone, where market can be looking for a top this week. So for now pair remains in bullish mode, therefore wave B) may find a base near 1.2790/1.2860 region where previous swings can act as support and push price higher.

GBPUSD, 4H

Ending diagonal

An ending diagonal is a special type of pattern that occurs at times when the preceding move has gone too far too fast, as Elliott put it. A very small percentage of ending diagonals appear in the C wave position of A-B- C formations. In double or triple threes, they appear only as the final “C” wave. In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement.
• structure is 3-3-3-3-3
• a wedge shape within two converging lines
• wave 4 must trade into a territory of a wave 1
• appears primarily in the fifth wave position, in the C wave position of A-B- C and in double or triple threes as the final “C” wave

 

Disclosure: Please be informed that information we provide is NOT trading recommendation or investment advice. All of our work is for educational purposes only.

http://www.ew-forecast.com/service

@ewforecast

By Gregor Horvat

Find more: Contributing Authors

---