Cable

Short-Term GBPUSD Elliott Wave Analysis

Published 16th May 2018

The short US Dollar trade and long GBP trade both come from severely overcrowded conditions. Speculative positions were caught off guard by the sharp reversal, which takes nearly a month as we publish this. It resulted in position unwinding.

The GBPUSD Elliott wave structure is approaching a relief bounce. Momentum is diverging already. This signals that the current swing to the downside is mature and has left most price action behind.

We continue to expect more downside after the relief bounce for the cable. The suboptimal Brexit process continues to leave the GBP/xxx pairs especially vulnerable to fundamental news flow. The sharp character of the drop matches that of what we have witnessed in 2008 as well as 2016 in the cable. We expect this to continue for most of 2018.

Medium Term GBPUSD Elliott Wave Analysis

Published 13th April 2018

On the medium-term timeframe, the GBP/USD is close to completing or has already completed a 4th wave. It is either of primary or of intermediate degree. The bounce since the 2016 low shows a deep retracement and makes a primary degree diagonal more likely. An intermediate degree 4th wave is possible but lower odds.

We expect continuation along the long-term trend to the downside. Primary wave 5(circle) and cycle wave V still need completion. As of today, we count 7 waves down from the 2014 top. That’s an incomplete Elliott wave pattern. It calls for followthrough to the downside. Our GBPUSD forecast is below the levels the cable saw in the 80s. It reflects a continuation of its Supercycle trend.

Long-Term Trend GBPUSD Elliott Wave Analysis

Published 6th November 2017 & amended 14th April 2018

The GBP/USD has decreased almost tenfold over the past couple of decades. It reflects the shift of superpowers. The USA has taken over the leading role from Great Britain over this timeframe. This is valid in an economic and also geopolitical sense.

Going forward, we anticipate the Supercycle trend to persist. A drop of the cable below its levels in the 80’s is likely. Cycle wave IV shows a simple 3-wave structure, which took a total of 22 years. Moreover, the subsequent drop looks impulsive. Especially the simple 3-wave move is important for our case here. It got confirmed as price action went below its b-wave low.

Is it possible that we have seen the low in the 80’s already? This is unlikely. The cable needs to develop a leading diagonal from that bottom. Moreover, the bounce from the 2016 bottom counts as a zig-zag or zig-zag combination as well. Leading diagonals at multiple degrees are possible but very rare.

 

Technical Analysis