Will the Pound Fall Off a Cliff?

The Elliott Wave Approach to one of the toughest markets

Cable is making a nice drop from the 1.3650 September high which can prove to be the start of a new bearish trend if we consider that the move higher from January of this year is most probably an ending diagonal. Wedge patterns such as this normally cause very strong turns, so we really have to be aware of more weakness in the weeks ahead as the pair may be headed much lower into a wave V) based on Elliott Wave cycles. A breach of the indicated support line may indicate that wave three is in play, targeting the 1.2600 area in the next few weeks.

GBP/USD Daily Chart

Another interesting point worth mentioning is that recovery on cable since 2016 has stopped at the 1.3500 region which was a swing low back from 2008 as well as trendline resistance connected down from the 1.7190 high. As long this region holds I believe that the pair remains in a downtrend.

GBP/USD Monthly Chart

This article was written by one or more of the following contributors: Blake Morrow, Nicola Duke, Grega Horvat, Steve Voulgaridis and Stelios Kontogoulas. They are all analysts at ForexAnalytix which provides macro & technical analysis for various financial instruments. Forex Analytix primary goal is to educate traders of all experience levels and to provide a wide range of tools which can help with their trading decisions.

This article was originally posted on FX Empire

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