QUICK ANALYSIS: GBPUSD: Two Scenarios It Could Follow

Recently, price action in this pair has been pretty confusing. Well, to me at least. Just when I think I have a good handle on what it's doing, I get fooled. But there's one thing that I am confident of though is that this pair is heading up in a wave (C) somehow, someway. Just a matter of how and when.

So I am posting 2 scenarios that I see could play out.

SCENARIO #1 -The Main Chart Above
The recent drop came just short of completing the POTENTIAL Bearish bat that I had been posting for more than a month now. What a disappointment after waiting more than a month for that darn bat to complete and having that big price drop come just before its' completion! If only.....oh, well! No use crying over spilled milk! But that bat is still there and if prices do climb, it will still hit that bat. What will it do then? We'll just have to wait and see. If prices do follow this scenario, then there is also a POTENTIAL bearish butterfly waiting that could mark the end of wave 3 of (C). However, the C point of this butterfly is not yet confirmed. That C point could still change depending on current price action. There is a good possibility that prices can STILL drop more clearly breaking the lower trend line of the current consolidation but as long as it does not break below the wave (B) end point @1.5330, then it will be a false break and prices should rebound back up from there.

SCENARIO #2
In this scenario, prices would make a rather large and possibly lengthy decline down in a continuation of wave (B) completing the wave C of (B). In this case, there is a POTENTIAL bullish butterfly that could mark the end of the wave C of (B) and of wave (B) itself before reversing and going up in wave (C). If prices do break down past 1.5330, then this scenario is favored.

CONCLUSION AND MY TRADE PLAN
Personally, I favor scenario #1 and I also think prices may drop a little more below the lower trend line before reversing back up creating a false break and trapping SHORT orders. Its how them "big boys" roll! They love taking out stops and pending orders before letting the market go in the "correct" direction (ok, so I'm somewhat of a conspiracy believer!). To make money, just gotta think like them!

At this point, I am just an observer (except for my existing LONG positions from a month ago which I am holding for the long -term). I will be watching the current price action very closely to see if there is signs of bullishness. If so, I may add LONG positions. If I see signs of bearish price action, I will sit aside and wait until the smoke clears some more before taking any action SHORT OR LONG.

*DISCLAIMER:
Please keep in mind that I am not giving any trading signals or trade calls here. Only providing my own trade thoughts for your benefit and insight as to my trading technique and style. Please don't ask if you should or should not take the trade. If you are not sure, then you do not have a trading plan for yourself in place. I suggest you make one before you continue to do any trading!

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