British Pound Crosses: Pullbacks Underway but Trend is Up

The GBPCHF remains entrenched in a 4th wave correction that will probably complete as a triangle. The rally from 1.9421 to 2.0963 is in 3 waves and would be wave A of the triangle. Wave B is underway now and will likely end near 1.95/97. In summary, expect the GBPCHF to range for the next few months. Beware though that we do expect a new low (below 1.9421) in a 5th wave (which could happen without a triangle unfolding).

We view the GBPCAD rally from 1.9011 to 2.0906 as the first wave (probably an A wave) in a bull cycle and the drop from 2.0906 as the second wave (probably a B 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 weeks and months. This bullish outlook remains intact as long as price is above 1.9287. Near term, look for support at 1.9750 and 1.9650.

The GBPAUD has closed and held above a resisting trendline that had contained price since August 2007. 5 waves up from 2.0294 indicates that the larger trend is now up. Expect support near 2.0590 and 2.0520 (50% and 61.8% levels).

We maintain that this move higher from the double bottom near 2.40 will continue. The GBPNZD is testing the 200 day SMA now, so expect a pullback into the 2.5440/2.5650 zone (former congestion and Fibo levels). A bullish bias is warranted above 2.4917.

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