Prices pushed higher intra-week, prompting quite a bit of doubt in our bearish view. However, Friday’s reversal leaves us with the impression that bears are still in control. Recall the importance we put on Friday closes, and see that traders were unwilling to go into the weekend long. As such, we’ll hold to our bearish view while prices are below the red down trendline. A push above that would mean that wave (4) up is still underway, although ultimately a bearish resolution comes under that count too.
The reason we keep these Elliott wave charts is to provide Context to a situation, to see if they “tell” us anything important. Sometimes, when in doubt, doing nothing is the only thing to do. In addition, we always like to think in terms of scenario planning with our top count. In other words, our top count is 60-75% likely in GBPUSD, but there are ALWAYS other counts. For instance wave C of (4) up, is 15-25% likely, while a (1) (2), 1 2, count up off the low is also a 5-10% probability (with others possible too (like a wave (4) triangle)). Thinking in this manner prevents one’s ego from becoming too invested in their top count, which as traders is important. Flexibility in one’s thinking, or scenario planning (what can go wrong with my trade), is the only way to go.
