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Have we had our correction in EURGBP (and EURUSD)? Worth considering, while watching for consolidation. Here is a 30 minute EURGBP chart showing the fall from the high on Sunday night to the low this morning. A nice A-B-C Elliott correction, where A = C exactly. Sometimes its possible to get a little too wrapped up in such perfection (although the slightly irregular but basically sideways B might disturb some).
Just a quick update on a pattern first demonstrated in this post on September 17th, then followed up on the 18th, then the 21st, and yesterday.
First the whole pattern with impulsive move from the base--a daily chart:
Then in more detail on a 4 hour chart:
For now, support might come in at the former resistance level, approximately 0.9075 to 0.9115. Another possiblity is that rather than providing support, this area could become a focus of range trading before another move up towards the 4.236 Fibonacci target.
Last Monday I posted some charts showing a pattern with a 2.618 extended target for EURGBP around the 0.9075-0.9090 region. There was potential for some topping action in this pattern, but the potential didn't really pan out. All we got was a few days backing and filling, with a low last Wednesday about 100 pips below the target level. Then on Thursday we clearly broke through the Fibonacci target area.
The fact that in this rally, ongoing since early August, we have had slight pullbacks roughly--or a little below-- the 1.618 and 2.618 extended levels gives some evidence that the Fibonacci pattern is valid. The next target in this pattern would be the 4.236 (phi cubed) level. And that would be in the area of 0.9500, or a little below.
Is the dollar bottoming? One pattern suggests it might be so.
A weekly chart of the cash index:
This pattern shows a base formed by the move down from the early March high to a low a few weeks later around 82.60. Then the beta point on the base comes with a high around 86.80 in late April. This alpha-beta base would project an impulsive move down with a 1.618 extended target around 8000 and a 2.618 extended target around 75.80 (75.77 specifically).
A daily chart:
Notice how from late May through mid July the market oscillated around the 1.618 target. Yesterday it came within a few pips of the 2.618 target and bounced, closing up on the day.
Still speculative, but something worth watching.
The amount of negative sentiment recently about GBPUSD has not really been matched by price action.
Here is a chart I posted on this blog almost 3 months ago (from June 25):
It shows an alpha-beta base formed from January through the March low, and then projects a continuation of an impulsive move towards a 2.618 Fibonacci target around 1.7136. At the time the chart was made, the market was oscillating around the minor 2.058 Fibonacci level.
Well, here we are in late September and guess what the GBPUSD market is still doing...
Still oscillating around that 2.058 Fibonacci level (1.6390). It approached the 2.618 target in early August, but then sold off. Yet it has never really broken out of the sideways range it has been in since June. It could still break towards the 2.618 Fibonacci target above 1.71.
I think, looking at this chart, one could say that it would take a move below 1.58 to really say the up move which began in March in GBPUSD is over.
A brief update on the pattern we have been watching: a base formed in March and April between 1.3737 and 1.2884, projecting an impulsive move above 1.51.
Seen on a weekly chart:
A daily chart shows how the initial breakout above the top of the base initially spiked above the 1.618 Fibonacci level, but then seemed to oscillate first around the 1.272 Fibonacci level, and then the 1.618. Then recently it broke out again above the 2.058 minor Fibonacci level.
This 2.058 level, once broken, has provided support. I had mentioned in earlier posts describing this pattern that this support might be broken and then the level--roughly around 1.4640--would become the center of gravity for further sideways oscillation. Yesterday it was--very briefly--broken. But as a 4 hour chart shows there seemed to be no serious offers below this level. It was a spike low and this morning's European session has seen a breakout to a new high for this move around 1.48.
Whatever talk there is in the market of an oversold USD, there seems very little evidence in market action of any conviction underlying such talk. For the moment, selling dollars is still the path of least resistance.
We may have seen an interim top in EURGBP this morning
Going back to the pattern shown last Friday, there has been in process an impulsive move off a beta low in early August (around 0.8450). The 2.618 Fibonacci target would be projected around 0.9090.
And shown in more detail on an 8 hour chart.
Notice how the first wave up from the base topped out in late August exactly 10 pips below the projected 1.618 target (0.8838 rather than the projected 0.8848).
If we adjust the pattern to take this in, the 2.618 target now become 0.9076 rather than 0.9093, which is roughly this morning's high.
Adjustment shown on daily chart:
And again on the 8 hour chart:
An update on the pattern noted last Friday, an impulsive extended move working out of a base pattern formed in late March and April. The top of the base (alpha) was formed on March 19th at 1.3737. The beta or bottom of this base pattern came roughly a month later (April 22) at 1.2884.
A classic extended 2.618 target for this pattern would be 1.5117.
So far the pattern has developed as follows (weekly chart):
Seen in more detail on daily chart:
And finally, on an hourly chart:
Notice how the 2.058 Fibonacci level around 1.4640 seems to be providing a rough level of support. As I mentioned on Friday, it is possible that this level will be broken--and once that happens--become a center of gravity around which the market might oscillate for a time before making its push up towards 1.51.
Accelerating towards the 2.618 target.
Anyone have any umm...eurusd buy stops right above the downtrend line?
Grinding up against a downtrend line after a bounce from Fibonacci level.
1 hour chart:
& 15 minutes:
The decline in EURUSD during early European session today ended right above a minor Fibonacci level (2.058). Roughly around 1.4640. Shown in a succesion of charts with increasing detail:
First on a weekly, showing the base formation (1.3737 - 1.2884) and the subsequent impulsive move up:
Then a daily chart:
4 hour:
And finally a 1 hour chart:
It looks like we might get further consolidation at this point. Notice that previously in this impulsive move, Fibonacci levels, once broken have formed a focus of activity, rather than support. During consolidative periods the market oscillated around first the 1.272 level and then the 1.618 level before moving higher. It is possible that the same thing might happen with the 2.058 level (around 1.4640). Although this has twice provided support--as seen on the 1 hour chart--if it happens to be broken, it could become a focus (center of gravity) level for another sideways consolidative period before another move higher. Just some Friday morning speculation. What is less speculative is that eventually it will move higher.
An impulsive move off an alpha-beta base. The first wave up failed 10 pips below a theoretical 1.618 target on August 27th. After a sideways correction which stayed above the top of the alpha-beta base, the current wave up should have a target somewhere between 0.9075 and 0.9100. (Minor resistance somewhere around 0.8940-0.8960.)
A daily chart:
And more detail in an 8 hour chart:
2 quick charts after close:
First a classic Elliott ABC pattern on the weekly chart, with a slightly irregular sideways B. (Top of A wave at 930 in late May. B correction ends in July.) Projecting a C top 1.618 times above the level of A would get us around 1093.
Then a daily chart showing impulsive pattern leading to current rally. 2.618 Fibonacci target would land somewhere around 1097.
Upside target above 1.51.
Weekly chart:
Daily chart showing internal Fibonacci levels.
And a 4 hour chart showing the 2.058 level as current resistance.
Notice how in late August--before the rally early this month--the market oscillated around the 1.618 level.