Cable's recovery from the June low of 1.5785 looks tired and from both
Elliott Wave and Classical TA perspectives; there is risk of a
significant sell-off ahead.
Under Elliott Wave analysis, Cable is interpreted to be in the
formative stages of a broad (c) Wave decline, wherein if Wave (c) equals
(Fibonacci) 1.618 times the distance of Wave (a), then a sell-off
toward the 1.5065 level can be expected over coming weeks.
Under Classical TA analysis, a potential Head & Shoulders
structure has been forming since late July, with a sustained break below
the 1.6210 support level completing this Reversal formation, to yield a
minimum downside objective of 1.5785.
However, in the bigger picture there exists not only a much larger
Head & Shoulders pattern dating back to November of last year (refer
Weekly Chart below) but Cable is also entrenched within a multi-year
Triangle structure for which over coming months the next Triangle
support will be encountered at 1.5100 - 1.5000 (right within the
vicinity of the Elliott Wave target above).
Furthermore, within this multi-year Triangle formation, Wave D will equal (Fibonacci) 60% of Wave B at 1.5060.
The Bottom Line
GBP/USD has likely completed three significant peaks this month; the
first at 1.6745, the second at 1.6620 and the third at 1.6455 yesterday.
This is probably setting-up a decline below 1.6210 toward the July low
of 1.5785, initially. However, such a fall would probably be part of a
much larger sell-off back toward the 1.5100/1.5050 area over coming
weeks.
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