Elliott Wave Counts on GBP/USD

06/11/2010 12:01 am EST

Focus: FOREX

Daily Chart: The daily chart shows that the market is not ready to continue on its bearish mode. It is still in correction mode. The RSI has crossed back up and the negative reversal is—so far—a premature signal.

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The current rally attempt can reach 1.48750, which would complete a Gartley, or AB=CD retracement pattern. This also brings the retracement to 50% and should be confluent with the 50-period simple moving average (SMA). It can also very well extend towards 1.50, near the 61.8% retracement.

I have a wave count that does not concern with the higher count. The internals show that the current move can be either C or 3. Either way, it is an impulse wave that may be equality or something like 138.2% extension. The equality projection goes to 1.4875. The 138.2% expansion projection is 1.4915.

Looking back at the daily chart, the preferred count seems to be wave C.

Four-Hour Chart: The four-hour chart below shows the market rallying from a bullish divergence. The head and shoulder in this case may be a continuation pattern as the market pushes past 1.4610.

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Hourly Chart: Since I am stalking wave C or 3, I will take a look at the internals. It appears we may be close to completing wave 1 of C or 3. Which means we should be looking for wave 2, then wave 3 of C or 3, the most dynamic wave in this time frame.

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By the Staff at CMS Forex

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