British Pound Tests 2.0550

[B]Commentary[/B]: The rally from 2.0261 is the 9th wave in the rally that began at 1.9621. As we have commented on here before, reversals occur following completions of 5 wave structures - or derivations of 5 wave structures - 9, 13, 17, etc. 9 waves means that one of waves 1, 3 or 5 is extended.

For trading purposes, it does not matter which one is extended but rather that the probability is high that a reversal will occur. There is no sign yet of a reversal but we are on the lookout for one. The clear ‘5 down? in the EURUSD favors a turn in Cable. Daily RSI is at 81, which is the highest since December 2006 (GBPUSD reversed then at 1.9847). Coming under the trendline drawn off of the 7/10, 7/13, and 7/17 indicates additional bearish potential. [B]Strategy[/B]: Flat