British Pound Crosses Setting Up for Big Bull Moves

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 “the bulk of the advance is complete. 5 waves up confirms our long term bullish bias. Expect a corrective decline to command the bulk of the next 2 months.” A corrective decline has unfolded, bringing the GBPCAD back to the midpoint of the wave 4 triangle. A deeper decline into the 61.8% at 1.9716 is possible but the structure of the decline (corrective) indicates that it is ok to test this market from the long side once again.

The GBPAUD came under 2.0547, potentially completing a flat correction in the process. This flat would be an expanded flat. In expanded flats, wave b exceeds the origin of wave a and wave c ends just beyond the origin of wave b. That is the case here. There is a good chance that the GBPAUD accelerates higher in the coming days and weeks.

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. Look to buy on dips near the mentioned 2.5775 area.

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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