Cable Crosses Slip - Correction or Reversal?
GBPJPY As noted last week, the rally from 221.05 may be a double zigzag pattern in a larger B wave position. Looking at the longer term chart, we still favor another leg down (below 221.05) to complete at least a 3 wave correction from 241.54 (A-B-C). That said, GBPJPY could extend to the 78.6% of 241.52-221.10 at 237.12 before the next leg down begins. The GBPJPY rallied to 239.42 on Tuesday before reversing and trading to 235.20 today. Short term (upward sloping) trendline resistance has capped gains but until we see a clear 5 waves down, we can not be confident that a top is in place. Another rally would expose a measure objective at 240.73 which is where wave W of B would equal Y of B. In summary, wave B has either topped or it is close (240.73). Either way, the next big move is down in wave C to below 221.05.
GBPCHF The rally from 2.3288 has stalled near the 61.8% of 2.4757-2.3288 at 2.4196 and the form of the rally is corrective. In other words, the rally is choppy and consists of overlapping waves. We are treating the entire decline from 2.4757 as wave A in an A-B-C correction. Thus, the rally from 2.3288 is wave B. There are two significant reversal areas. The first is 2.4196 which is the confluence of the 61.8% extension of 2.3288-2.4002 / 2.3749 and the 61.8% retracement of 2.4757-2.3288. Wave C may be underway but a rally above 2.4268 would shift focus to the next reversal area which is the confluence of the 100% extension of 2.3288-2.4002 / 2.3749 and the 78.6% retracement of 2.4757-2.3288. The zone is 2.4443/63. Coming under 2.4002 suggests that a wave B top is in.
GBPAUD The break of trendline support last month signaled a long term change in trend and well continue to look lower over the long term as a result. A small 4th wave correction has played out as expected and we are looking for a new low to complete a 5 wave decline from 2.5017 (larger wave 3). A measured objective for the low is at the 161.8% extension of 2.5493-2.4664 / 2.5017 at 2.3675. Support is reinforced there by the 4/26 low at 2.3671. A bounce back towards 2.4184 is expected following the completion of larger wave 3.