GBPUSD Elliott Wave Analysis -- 31st July, 2015

Cable continued towards the downside confirming the alternate count and target was reached and exceeded by less than 4 pips before reversing directions and moving upwards as expected.

Recently we have been providing very short term targets because of the nature of Cable`s movement, as Cable has been consolidating in a range with choppy movement which is what should be expected from a corrective structure.

Today`s main count expects Cable to continue moving upwards while the alternate hourly count expects Cable to reverse directions and unfold towards the downside making new lows.

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

Main Hourly Count

– Invalidation Points: 1.5549 — 1.5932
– Confirmation Point: 1.5679 — 1.5690
– Upwards Targets: 1.5703 — 1.5772 — 1.5810
– Wave number: ii pink
– Wave structure: Corrective
– Wave pattern: Double Zigzag

Alternate Hourly Count

– Invalidation Point: 1.5690
– Confirmation Point: 1.5549
– Downwards Targets: 1.5538 — 1.5452
– Wave number: (iii) green
– Wave structure: Motive
– Wave pattern: Impulse

Main Daily Wave Count

This count expects that primary wave B maroon is complete 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 might be complete as well and that intermediate wave (3) black has started unfolding downwards.

Within wave (1) black, 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.

Intermediate wave (2) black unfolded as a zigzag labeled waves A, B and C blue.

Wave B blue unfolded as a zigzag labeled waves a, b and c pink.

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

Within intermediate wave (3) black it is expected that wave i pink is complete and that wave ii pink has more to offer towards the upside.

As far as MACD study goes, it is worth noting that we are tracking the development of a bullish divergence on the daily chart as the recent price lows registered new lows on MACD while price failed to make new lows.

This count would be confirmed by movement above 1.5690.

At 1.5703 wave ii pink will reach 0.618 of wave i pink and that is the highly probable target. The second target is at 1.5810 as at that level wave (y) green will reach equality with wave (w) green.

This count would be invalidated by movement above 1.5932 as wave ii pink may not retrace more than 100 % of wave i pink and as well this count would be invalidated by movement below 1.5466 as within wave (y) green no B wave may retrace more than 100 % of its A wave.

Main Hourly Wave Count

This count expects that wave C blue and therefore intermediate wave (2) black might be complete and that intermediate wave (3) black has started unfolding towards the downside.

Within intermediate wave (3) black, it is expected that wave i pink is complete and wave ii pink is underway.

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

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

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

This count expects that wave ii pink is unfolding as a double zigzag labeled waves (w), (x) and (y) green with waves (w) and (x) green complete and wave (y) green is unfolding towards the upside.

Wave (w) green unfolded as a zigzag labeled waves a, b and c orange with wave a orange unfolding as an impulse labeled waves 1 through 5 purple.

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

Wave a orange unfolded as a leading diagonal labeled waves 1 through 5 purple.

Wave b orange unfolded as a zigzag labeled waves A, B and C purple.

Wave c orange unfolded as an impulse labeled waves 1 through 5 purple.

This count expects that within wave (y) green, waves a and b orange are complete and wave c orange is unfolding towards the upside. Since this is the second leg within a double zigzag, wave (y) green is expected to unfold as a typical zigzag with five waves up (represented by wave a orange), three waves down (represented by wave b orange) and finally a five wave up (represented by wave c orange)

Wave a orange unfolded as an impulse labeled waves 1 through 5 purple.

Wave b orange unfolded as a double zigzag labeled waves W, X and Y purple.

This count would be initially confirmed by movement above 1.5679 and the final confirmation point is at 1.5690.

At 1.5703 wave ii pink will reach 0.618 of wave i pink and that is the highly probable target. The second target is at 1.5772 as at that level wave c orange will reach equality with wave a orange. The final target is at 1.5810 as at that level wave (y) green will reach equality with wave (w) green and as well at that level wave a orange will reach equality with wave y orange within wave (y) green.

This count would be invalidated by movement above 1.5932 as wave ii pink may not retrace more than 100 % of wave i pink and as well this count would be invalidated by movement below 1.5549 as within wave c orange no second wave may retrace more than 100 % of its first wave.

Alternate Hourly Wave Count

This count expects that wave ii pink might be complete as a zigzag labeled waves (a), (b) and (c) green and that wave iii pink has started unfolding downwards.

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

Wave iii orange unfolded as an impulse labeled waves 1 through 5 purple.

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

Wave a orange unfolded as a leading diagonal labeled waves 1 through 5 purple.

Wave b orange unfolded as a zigzag labeled waves A, B and C purple.

After the completion of wave (b) green, wave (c) green unfolded upwards as an impulse labeled waves i through v orange.

Within wave iii pink it is likely that waves (i) and (ii) green are complete and wave (iii) green has started unfolding towards the downside.

Wave (i) green unfolded as a leading diagonal labeled waves i through v orange.

This count would be confirmed by movement below 1.5549.

At 1.5538 wave (iii) green will reach equality with wave (i) green and at 1.5452 wave (iii) green will reach 1.618 of wave (i) green.

This count would invalidated by movement above 1.5690 as wave (ii) green may not retrace more than 100 % of wave (i) green and it should be noted that the invalidation point will be moved to the end of wave (ii) green once we have confirmation on the hourly chart that wave (iii) green is underway.