Sterling Pivots at the False Breakout Extreme - Bulls Alerted

We've written about the GBP/USD a couple of times over the past month or so anticipating a wave 'B' bottom. This week, Sterling pivoted at the point where wave 'B' could be a false break down. This pattern we're favoring is the expanded flat pattern that began on March 18 2015.

Wave A is a double (flat-x-zigzag) that terminated on June 17, 2015.

Wave B as labeled is a triple (flat-x-zigzag-flat) that appears to have terminated on Jan 21.

That suggests wave C would subdivide as 5 waves higher towards 1.54 and possibly 1.60.

This is the favored count, but not the only count. There are other possibilities so don't mistaken this to believe prices ONLY have to go higher, because they don't. If prices fall below this week's low, we'll reconsider the counts/patterns.

A meaningful move above 1.45 would punch through significant resistance that could be symptomatic of the bullish undertones.

We touched on these bullish undertones for Sterling in yesterday's GBP/JPY post. So this appears to be somewhat broad based at least in the shorter term. Longer term, we are looking for Sterling to be much weaker.

In the chart above, note how SSI was shrinking as the pair was falling out of bed in January. This shift in sentiment during a strong trend is another symptom of prices searching for a bottom.

I would encourage you to check out the live SSI feed so you can keep an eye on shifting sentiment.

Lastly, the equity market sell off has market expectations for future rate hikes on the skids. This was a big risk coming into 2016 that DailyFX highlighted in their Q1 2016 US Dollar forecast. Check it out here

Happy Trading!

评论:

FXCMSSI continues to drop (now at +1.41) and the wave structure is looking constructive to the upside now that we have cleared 1.45. 1.4365 (smaller degree wave 1 high) should hold if this is a larger wave C higher.