The recent gyrations over the last few weeks, appear to be taking the shape of a possible bearish rising wedge, Elliott Wave calls this pattern an ending diagonal.
Essentially it’s a terminal pattern. A strong move below $83.60 is needed to support a reversal, as it may still chop and grind higher but remains in the overall wedge shape. An impulsive move under $83.60, then $80.00 would be a strong sign to argue that its likely completed an impulse wave (5 wave advance) from the Nov 2018 low and potentially a much larger impulse wave from the 2016 lows, which would be significant as it can further support a large retracement towards $45.00 – 40.00.
I would watch the price action over the following days if you own this stock, as the rising wedge is a basic reversal pattern that is supportive of a pending reversal.
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I suspect a relief bounce is close at hand for some of the GBP pairs, when we look at the decline from the May 2019 high, the new low on pairs such as GBPCHF and GBPCAD are supportive that the new low on GBPUSD is most likely the 5th wave of an impulse wave (5 wave decline) from 13176.
A partial rally in 3 waves is favored soon, that can offer an opportunity for traders that are looking to sell GBPUSD, stops need to be placed at 13176. That is likely to align with a bounce on pairs like GBPCHF and GBPCAD etc.
Our bigger picture ideas on GBPUSD are still targeting a move under 12444 towards 12400 – 12300.
Unless a complete reversal above the May 2019 highs, then all the pairs listed in this article are on a sell. A retracement in 3 waves to correct the decline from the May 2019 high is favored soon, once wave [v] ends.
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Since the last post, its declined nicely, the completion of a 5 wave decline from 295.38 into 279.74, followed by a bounce could suggest the move from 279.74 is close to ending or possibly completed at 289.25.
A strong move below 285.00 is needed, followed by an impulsive decline below 282.00, would be a strong sign to further support a move lower. Initial downside targets reside around 274.00, although based on the next decline will help decide if the move from 295.38 will develop into a 3 wave decline, which is bullish, or a 5 wave decline, which would be bearish.
The strong reversal from the April 2018 high appears impulse looking on a few world stock markets, particularly the FTSE and NIK-225. So we are focussed on the cleaner patterns from the April high. Having put in a 5th wave to end an impulse wave from the April 2018 high a few days back, the subsequent bounce we have seen over the last few days is of no surprise to us, its actually what we want to see, as we are looking for a partial retracement in 3 or 7 waves to offer a bearish setup for a move lower.
The bounce may still see a bit more upside and test the 7300 area (7350 cash market), but as long as the current bounce remains as a 3 or 7 swing rally, and holds below 7474 (7527 cash market) then it can offer traders a setup to move lower. A strong move under 7200 would be the first clue to support a move lower and argue the recent bounce we have seen over the last couple of days has likely ended.
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We are currently tracking a possible impulse wave from the all-time high at 11855, a new low is still needed to end a 5th wave of a suspected impulse wave as shown. Whilst the Banknifty has moved to a new low, we want to see the Nifty confirm that new low on the Banknifty, that would offer a bearish reversal clue.
If we do see a 5th wave to end the current impulse wave idea from the April 2018 high, then a bounce thereafter in 3 waves can be sold against 11855 stops. Based on the wave pattern from the lows made in 2016, the decline from 11855 could be a very important reversal signal, although we are taking it one step at a time.
Short term there are a few ideas we could suggest for wave [iv] such as a flat or triangle, so unless a big move above 11564, then allow for a new low as shown for wave [v]. It’s then it can set up for a partial retracement in 3 waves.
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