The GBPCHF should work higher over the next several weeks, in order to correct the large decline that has taken place recently. On the other hand, the GBPAUD and GBPNZD appear to be turning down from recent rallies. New lows are expected in those pairs.
We wrote last week that “the GBPCHF decline is probably near a pausing point. Wave iv of 3 is expected to begin soon and will probably take the shape of a flat or triangle. 2.1841 (former 4th wave extreme) should act as a ceiling for wave iv of 3.” Near term, it appears that there are 5 waves up from 2.0429 (3/11 low). The drop from 2.0769 is viewed as corrective and ended right at the 61.8% of 2.0429-2.0769. Expectations are for price to exceed 2.0769 soon.
There is no change to the idea that “a major bullish base has formed”. We view rally from 1.9011 to 2.0906 as the first wave in a bull cycle and the drop from 2.0906 to 1.9307 as the second wave in that bull cycle. Whether the cycle proves to be 3 or 5 waves does not matter at this point. Both scenarios call for a rally through 2.0906 in the coming months. Near term, a push above 2.0121 would complete a short 5 wave impulse and give way to a corrective decline that probably reaches at least 1.9825.
The GBPAUD broke through the resisting trendline that we showed on last week’s chart. We had noted that a break through this line would signal a major change in trend. However, the structure of the rally from the low is not an impulse but rather a correction (double zigzag). Therefore, one more low is expected before a major reversal.
The same can be said about the GBPNZD rally as the GBPAUD rally. That is, the rally is corrective. The GBPNZD advance is clearly a simple 3 wave correction. The drop from 2.5572 is wave i in a 5 wave bear cycle that should lead to the pair registering a new low (below 2.4112) before a major reversal. The bias is bearish as long as price is below 2.5572. If price exceeds 2.5206 (which seems likely), then look for resistance at 2.5320 (61.8%).
[B]Tell us what you think about this report: contact the strategist about the article at <[email protected]>[/B]
[B] [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.
[B]SCHEDULE[/B]
Monday: EURJPY, GBPJPY, CHFJPY, CADJPY, AUDJPY, NZDJPY
Tuesday: EURGBP, EURCHF, EURCAD, EURAUD, EURNZD
Wednesday: GBPCHF, GBPCAD, GBPAUD, GBPNZD
Thursday: AUDCHF, AUDCAD, AUDNZD
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