The British Pound crosses should continue to fall, although a few of the pairs (the Pound / commodity currency crosses) are probably nearing significant bottoms within the next month or so.
The GBPCHF decline is probably near a pausing point. The drop below 2.1181 today may complete wave iii of 3 within the 5 wave drop from the July 2007 high at 2.4963. Wave iv of 3 is expected to begin soon (probably next week) 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.
Until the resistance line that is drawn off of the January and September 2007 highs is broken, the trend for the GBPCAD is considered down. However, price has held above the November low of 1.9011 for 3 months now suggesting that a major bullish base is being formed.
We wrote last week that “the GBPAUD is at its lowest level since May 1997 and there is probably a good deal more left for the pair to fall. Potential measured support begins at 2.0418 and extends all the way below 2.00. When looking at the separate legs of the cross, the AUDUSD is in a strong uptrend and the GBPUSD may be bottoming. This translates into the GBPAUD continuing to drop, albeit at a slower rate of change.” Watch for potential support near the parallel channel line; which is just below 2.06.
The GBPNZD dipped below the December 2005 low of 2.4140 yesterday, negating the bullish setup. The decline from 2.7791 would equal 161.8% of the 2.9718-2.6127 decline at 2.1975. Another potential terminus for the drop is 2.2717. This is where the drop from 3.0685 is equal to 61.8% of the 3.7067-2.4140 decline. In summary, the trend is still down. A break above the trendline that connects the September 2007, November 2007, and January 2008 highs would indicate a change in trend.
[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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