British pound nears resistance: Elliott Wave

The British pound broke to a new high against the U.S. dollar (FOREX:GBPUSD) as expected after we identified the end of a corrective retracement at 1.5850. As such, we are now tracking a new impulse leg up, which can be wave C and the final part of a double zig-zag in wave E). If this is the correct count, then the rally from the July low is near completion. Ideally we will see a reversal down from around the 1.64-1.66 region.

We also are tracking a different count that shows a five-wave rally from the July low, but even this count is calling for a turning point as we see the pair in a five-wave up.

On the four-hour chart, the GBP/USD is in a pullback mode, which we think is a corrective move because wave (iv) is part of the incomplete wave C. As such, we expect a new high with a push higher in wave (v) into the 1.6500-1.6600 region. We may see a top formation of a triangle and the end of a big wave E) in that area. However, this only can be confirmed by an impulsive bearish reversal, so until then the trend remains up.

About the Author

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and TheLFB.com. He also is founder of forex services on www.ew-forecast.com. EW-Forecast.com provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website: http://www.ew-forecast.com/

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