Elliott Wave Analysis of the GBP/USD Currency Pair by Sid from ElliottWavePredictions.com

Elliott Wave Analysis of the GBP/USD Currency Pair by Sid from ElliottWavePredictions.com. Click on the charts twice to enlarge.

Based on the main and alternate wave counts shown above, the GBP/USD pair should be very close to a significant turn to the downside. The wave 4 triangle that started January 2009 should immediately be followed by a downward thrust upon competion. If the triangle ended on October 31 last year, the start of wave 3 black to the downside is imminent. Alternatively, if the 3-year-long triangle has yet to complete, recent upward movement is less than 200 pips away from retracing .618 of wave D black (alternate). Ususally, one wave of a triangle retraces almost exactly .618 of the distance traveled by the previous wave of the triangle.

All of these clues lead me to believe that as soon as the Pound completes the expanding ending diagaonal its in, aggressive selling will follow. In an expanding ending diagonal, wave 3 (orange) must be longer than wave 1 (and it was), and wave 4 must be longer than wave 2 (and it was), and now, wave 5 must be longer than wave 3. So, as soon as the Pound reaches 1.60425, all requirements will have been met. Often, wave 5’s of expanding ending diagonals end just before reaching a line extending from the extremes of wave 1 and 3 of the diagonal. So the Pound is likely to move upward to start the trading week, to at least 1.60425, but is unlikely to reach 1.6183 (invalidation of the main count, and is also unlikely to move much above that same level amyway if the alternate count is correct.

If the triangle ended on October 31, 2011, (and I think it did because Wave E retraced almost exactly .618 of Wave D), the downside target for the end of the thrust out the triangle is 1.2275. If the alternate count is the correct one, wave E should reach the .618 retracement target of wave D within one or two days (at 1.61683), and depending on how high wave E does go, will have a very similar downside thrust target that I can’t be exact on quite yet, but is likely to be approximately 1.245.

With that kind of predicted movement on the near horizon, as you would expect, there are other wave counts among the many stock markets, commodities and currencies I analyze that are showing complete, or nearly complete wave structures, so imminent corrections, if not larger degree trend changes are expected in many items.  I’ll be going over all of those wave counts and targets in my weekend webinar.  Here’s how to enroll.