GBPUSD Elliott Wave Analysis -- 3rd March, 2015

Cable continued trading in an even tighter range. I have to admit -as an analyst and trader-, that the tighter price action become, the more anxious I am to enter the market and trade. Typical trader behavior if I am to say.

So instead, I decided to go all the way to the tick chart and provide a detailed analysis of the recent downwards movement. To be able to present all the wave labeling I came up with, I will be presenting a 30 minutes chart at the end of today`s analysis.

Today`s main count expects Cable to reverse directions and move towards the upside with a very narrow lee way space. The alternate count on the other hand expects that trend is a downtrend and that upwards movements should prove corrective.

At this stage, both counts have almost equal probabilities and we will let price action decide for us which count is the highly probable count as we wait for either count`s confirmation point to be reached.

Main Hourly Count

– Invalidation Points: 1.5344 — 1.7193
– Confirmation Point: 1.5553
– Upwards Targets: 1.5616
– Wave number: v pink
– Wave structure: Motive
– Wave pattern: Impulse/Ending diagonal

Alternate Hourly Count

– Invalidation Points: 1.4951 — 1.5553
– Confirmation Point: 1.5395
– Upwards Targets: 1.5424
– Wave number: b pink
– Wave structure: Corrective
– Wave pattern: Flat/Expanded flat

Main Daily 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 likely complete as an impulse labeled minor waves 1 through 5 blue and that intermediate wave (2) black is at its early stages.

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 zigzag labeled minute waves a, b and c pink.

Wave 5 blue unfolded as an impulse labeled minute waves i through v pink with minute wave iii unfolding as an impulse labeled minuette waves (i) through (v) green.

Within intermediate wave (2) black, minor wave A blue is unfolding towards the upside as an impulse with minute waves i through iii pink complete and it is likely that minute wave iv pink is mature and wave v pink is starting to unfold towards the upside.

As far as MACD study goes, a valid interpretation of current MACD state is that MACD readings are expected to reach the peak by the end of wave A blue. Setting the stage for a divergence once wave C blue is complete.

Viewing the blue trend line touching the ends of minor waves 2 and 4 blue, it seems that Cable is breaking out from the downtrend. That blue trend line should provide support to any incoming downwards correction.

At 1.5616 wave v pink will reach equality with wave i pink.

This count would be invalidated by movement below 1.5224 as wave iv pink may not enter the price territory of wave i pink and it should be noted that the invalidation point will be moved to the end of wave iv pink once we have confirmation on the daily chart that wave v pink is unfolding towards the upside. As well, this count would be invalidated by movement above 1.7193 as intermediate wave (2) black may not retrace more than 100 % the length of intermediate wave (1) black.

Main Hourly Wave Count

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

Within intermediate wave (2) black, it is expected that minor wave A blue is unfolding towards the upside as an impulse labeled waves i through v pink with waves i through iii pink complete and wave iv pink is likely complete and wave v pink is starting to unfold towards the upside.

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

Within it wave (iii) green unfolded as an impulse labeled waves i through v orange.

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

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

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

Wave (c) green unfolded as an ending diagonal labeled waves i through v orange and this count expects that wave v pink has started towards the upside.

As far as MACD study goes, MACD is showing a bullish divergence as the latest downwards movement made a new low while MACD failed to follow suite and registered a higher low and in the process creating a bullish divergence.

This count would be confirmed by movement above 1.5553.

At 1.5616 wave v pink will reach equality with wave i pink.

This count would be invalidated by movement below 1.5344 as within wave v pink no second wave may retrace more than 100 % the length of the first wave. As well, this count would be invalidated by movement above 1.7193 as intermediate wave (2) black may not retrace more than 100 % the length of intermediate wave (1) black.

Alternate Hourly Wave Count

This count explores the possibility that wave A blue is mature and might be complete and that wave B blue is unfolding towards the downside as a zigzag correction.

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

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

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

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

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

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

Following the completion of wave iv pink, wave v pink unfolded towards the upside as an ending diagonal labeled waves (i) through (v) green.

Within wave B blue, it is expected that waves a pink is complete and that wave b pink is unfolding in a sideways manner.

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

Wave b pink is expected to be underway with wave (a) green complete. On 30 minutes chart, we can tell that the subdivisions within wave (a) green are not that clear and that highly suggests that wave b pink as a whole is unfolding either as a flat or an expanded flat correction.

The minimum target for the completion of wave (b) green at 90 % the length of wave (a) green was met, this means that wave (b) green is structurally mature. However, if wave (b) green is in fact an expanded flat correction then wave (b) green might extend towards 1.5326 as at that level wave (b) green will reach 1.382 the length of wave (a) green.

Whether wave (b) green is complete or not, we should expect further upwards movement to complete wave b pink. Therefore wave (c) green is expected to unfold towards the upside.

It would be confirmed that wave (c) green is unfolding towards the upside by movement above 1.5395.

At 1.5424 wave b pink will reach 0.382 the length of wave a pink.

This count would be invalidated by movement below 1.4951 as wave B blue may not retrace more than 100 % the length of wave A blue. As well, this count would be invalidated by movement above 1.5553 as wave b pink within wave B blue may not retrace more than 100 % the length of wave a pink.