GBP/CHF Major Long Term Bearish Implications


[B]Commentary[/B] - See last week?s report for the longer term structure. Near term, we have identified a tradable pattern. The dominant pattern is the 3 wave zigzag decline from 247.91 (waves a and c are also equal). This means that the larger trend remains towards higher prices. The 5 wave rally over the last two days strengthens the bullish case. If a near term low is not already in place at 245.84 then support should be strong at 245.34. A word of caution though, it looks like a triangle is unfolding in both the USDJPY and the EURJPY (very short term). This means that a terminal thrust higher would likely test the recent highs before an even larger decline wave Y. What we are looking at in GBPJPY is a test of 247.91 to be followed by wave Y that comes under 243.95 to complete a complex correction.
[B]Strategy[/B] - Look for a top close to 247.91 and target a drop below 243.95.

[B]Commentary [/B]- It looks like the long term reversal is underway. The 5 wave decline from 2.4751-2.4503 is very clear. The 3rd wave is extended and the 5th wave was an ending diagonal. An irregular flat (which is not irregular at all - just a name), is unfolding from 2.4503 and is likely to end near either the 61.8% of 2.4751-2.4503 at 2.4656 or the 78.6% at 2.4698. The small triangle forming now should give way to a terminal thrust to one of these levels before a third wave that goes much lower.
[B]Strategy [/B]- Establish bearish positions between 2.4656 and 2.4698, against 2.4751, for the break to much lower levels.

[B]Commentary [/B]- We wrote last week that “a correction is unfolding from 2.3295 that should extend to 2.3921 (or close to it). The decline from 2.3921 was an extended 5th wave and extended 5th waves are often fully retraced. Look to add to bearish positions near 2.3921 and keep risk at 2.4295.” The high yesterday was at 2.3920. The GBPAUD decline is back underway. The next bearish objective is at the July 2005 low at 2.2671.
[B]Strategy [/B]- Bearish now, against 2.4295, target 1 is 2.2671