British Pound Crosses Correcting Lower


The GBPCHF remains in a 4th wave correction that will complete as either a triangle or flat. The rally from 1.9421 to 2.0963 is in 3 waves and would be wave A of the triangle (or flat). Wave B is underway now and will likely end below 2.0012. In summary, expect the GBPCHF to range for the next few months (although a flat would see the correction end closer to 2.15).


We wrote last week that “near term, a 5 wave advance from the 5/19 low at 1.9287 is nearing completion. A 4th wave triangle looks complete (or very nearly so at today’s low) and wave 5 is probably underway. Expect a push through 2.0248 within the next week 2 weeks.” The GBPCAD exceeded 2.0248 and hit a high of 2.0410 yesterday. One more high is possible to complete wave 5 of 5 but the bulk of the advance is complete. The 5 waves up confirms our long term bullish bias. Expect a corrective decline to command the bulk of the next 2 months.


We wrote last week that “a major low may be in place for the GBPAUD and the short term chart above illustrates why. It is possible to count 5 waves up from 2.0294 (which is a multi-year low) and 3 waves down from 2.0933. Wave 5 of the advance was a diagonal (overlapping) and the 3 wave correction is just shy of the 61.8%, which is at 2.0538. The advance is expected to begin soon.” The advance did begin and price hit 2.0963 yesterday but price has pulled back a good deal. The count above is intact as long as price is above 2.0587. A drop below there indicates that a flat is underway and that wave 2 will not end until below 2.0547.


We maintain that this move higher from the double bottom near 2.40 will continue although near term, there is potential for a sizeable decline; to at least 2.5775. Longer term though, the GBPNZD has overcome the 200 day SMA, which bodes well bulls.

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[B]TREND ANALYSIS[/B] is based on a rolling pivot model. LONG TERM TREND is determined by the last 3 months of price data (high, low, close). SHORT TERM TREND is determined by the last 4 weeks of price data (high, low, close). R3, R2, R1, PL, PH, S1, S2, and S3 are provided to aid in identifying entries and exits. These are objective measures and our subjective analysis (STRATEGY) may differ.

Monday: EURGBP, EURCHF, EURCAD, EURAUD, EURNZD
Tuesday: EURJPY, GBPJPY, CHFJPY, CADJPY, AUDJPY, NZDJPY
Wednesday: GBPCHF, GBPCAD, GBPAUD, GBPNZD
Thursday: AUDCHF, AUDCAD, AUDNZD