British Pound Tracing Out Wave 2

[B]Commentary[/B]: Cable has broken under the May low at 1.9676, negating the bullish setup and indicating additional bearish potential. More importantly, the pair has dropped under a support line that dates to April 2006. Given the size of the correction from 1.9621, it is likely that 1.9954-1.9621 was the initial 5 waves down (larger wave 1).

This places Cable in wave 2 higher, which should end between 1.9788 and 1.9827. 1.9788 is especially attractive because it is the 50% of 1.9954-1.9621 and the previous 4th wave is at 1.9791. It is also possible that wave 2 is complete since is it possible to count an a-b-c from 1.9621 and the reversal occurred at the 38.2% (1.9748). 2nd waves tend to retrace more than 38.2% of wave 1 though, which is why we are being patient in taking bearish action. [B]Strategy[/B]: Getting bearish at 1.9788, against 1.9954, for a break below 1.9621