GBPUSD Elliott Wave Analysis -- 27th May, 2015

Cable unfolded towards the downside as expected under the alternate count. Both targets were reached and exceeded by 29 pips.

Evidence is compiling against the current corrective downtrend but nonetheless, we should always assume that the trend remains the same until proven otherwise as that is what the market keep teaching us day in and day out. We will go through the studies supporting trend reversal in today`s analysis.

As always we will wait for either count`s confirmation points to be reached to determine the highly probable count.

Main Hourly Count

– Invalidation Points: 1.5438
– Confirmation Point: 1.5301
– Downwards Targets: 1.5286 — 1.5267
– Wave number: B blue
– Wave structure: Corrective
– Wave pattern: Double Zigzag

Alternate Hourly Count

– Invalidation Points: 1.5301 — 1.7193
– Confirmation Point: 1.5438 — 1.5701 — 1.5818
– Upwards Targets: 1.5883 — 1.5931
– Wave number: C blue
– Wave structure: Motive
– Wave pattern: Impulse/Ending diagonal

Main Hourly Wave Count

This count expects that primary wave B maroon is complete as a zigzag labeled intermediate waves (A), (B) and (C) black and that primary wave C maroon is unfolding towards the downside.

Within wave C maroon intermediate wave (1) black is complete as an impulse labeled minor waves 1 through 5 blue and intermediate wave (2) black is unfolding towards the upside.

Wave 1 blue unfolded as a leading diagonal labeled minute waves i through v pink.

wave 2 blue unfolded as a zigzag structure labeled minute waves a, b and c pink.

Wave 3 blue unfolded as an impulse labeled minute waves i through v pink.

Wave 4 blue unfolded as a triangle labeled minute waves a through e pink.

This count expects that within intermediate wave (2) black, wave A blue is complete and wave B blue is at its very late stages.

This count would be confirmed by movement below 1.5301.

At 1.5286 wave v orange within wave (c) green within wave y pink will reach 100 % of the distance traveled from the start of wave i orange to the end of wave iv orange. At 1.5267 wave (c) green within wave y pink will reach 100 % of wave (a) green.

This count would be invalidated by movement above 1.5818 as within wave B blue no X wave may retrace more than 100 % the length of its W wave. As well, this count would be invalidated by movement below 1.4566 as within a zigzag wave B blue may not retrace more than 100 % of wave A blue.

Main Hourly Wave Count

This count expects that minor wave (1) black is complete and that wave (2) black has started unfolding towards the upside.

Within wave (2) black, it is expected that wave A blue is complete as an impulse labeled waves i through v pink and wave B blue is starting to show signs of maturity as well.

Within wave A blue, wave iii pink unfolded as an impulse labeled waves (i) through (v) green.

Within wave iii pink, wave (iv) green unfolded as a zigzag labeled waves a, b and c orange.

Wave iv pink unfolded as a double zigzag labeled waves (w), (x) and (y) green.

Wave (w) green unfolded as a zigzag labeled waves a, b and c orange.

Wave (y) green unfolded as a zigzag labeled waves a, b and c orange.

Wave v pink unfolded as an impulse labeled waves (i) through (v) green.

Wave (iii) green extended into waves i through v orange with wave v orange unfolding as an impulse labeled waves 1 through 5 purple.

Wave (iv) green unfolded as an expanded flat correction labeled waves a, b and c orange.

After the completion of wave A blue, it is expected that wave B blue is at its late stages as a double zigzag labeled waves w, x and y pink with waves w and x pink complete and wave y pink is underway.

Wave w pink unfolded as a zigzag labeled waves (a), (b) and (c) green with wave (a) green unfolding as an impulse labeled waves i through v orange.

Wave x pink unfolded as a zigzag labeled waves (a), (b) and (c) green with wave (b) green unfolding as a triangle labeled waves a through e orange.

Within wave y pink waves (a) and (b) green are complete and wave (c) green is unfolding downwards as an impulse labeled waves i through v orange with waves i through iv orange complete and wave v orange is underway.

This count would be confirmed by movement below 1.5301.

At 1.5286 wave v orange will reach 100 % of the distance traveled from the start of wave i orange to the end of wave iv orange. At 1.5267 wave (c) green will reach equality with wave (a) green within wave y pink.

This count would be invalidated by movement above 1.5438 as within wave v orange no second wave may retrace more than 100 % of its first wave.

Alternate Hourly Wave Count

This count expects that wave y pink and therefore wave B blue are complete and that wave C blue has started unfolding towards the upside.

Wave (c) green unfolded as an impulse labeled waves i through v orange.

This count is supported by the presence of the following:

1- MACD bullish divergences: Three MACD divergences which suggest that downtrend is running out of steam.

2- Elliott`s Channel: Drawn from the start of wave w pink to the end of wave x pink with a parallel line drawn at the end of wave w pink. This channel should typically contain corrective structures and that is exactly the case for Cable -so far-.

3- Wave y pink exceeded equality with wave w pink by 29 pips and that is a sign of maturity of a corrective structure like a double zigzag.

Confidence in this count will start to increase by movement above the very short term confirmation point for this count which lies at 1.5438 and the initial confirmation point is at 1.5701. Confidence in this count will increase dramatically by movement above 1.5818.

At this stage we are able to calculate targets for wave C blue which is expected to take few days to be reached. We will be able to calculate short term targets once wave C blue starts to subdivide towards the upside. At 1.5883 wave (2) black will reach 50 % of wave (1) black and at 1.5931 wave C blue will reach 50 % of wave A blue.

This count would be invalidated by movement below 1.5301 as within wave C blue no second wave may retrace more than 100 % of its first wave.