Correction in Cable continues
GBPUSD has shown signs of a final C wave in progress, to complete an ABC correction in the Intermediate degree. The issue with US Dollar pairs is that most of them are within large corrective structures; mainly because the Dollar index is in a large corrective structure as well.
Fortunately we have the Elliott wave principle to guide us through such corrective market conditions. However, trading in these conditions becomes much more difficult compared to trading in trending markets.
It all looks good and makes you believe in the bullish bias. However, there is a possibility of deeper or a prolonged correction for the Minor-wave-2.
Cable on the hourly chart
Micro degree wave-2 correction is at early stages for a conclusive forecast in lower timeframes. None the less, the initial expectation for any corrective structure is a simple ABC. So here it is:
This is just one possibility. But the structure could be anything from ZigZag, Flat, Triangle or even a complex structure like the double-three or triple-three. Analyzing wave counts in even lower degrees is beyond the scope of this post.
In general, the wave-2 usually retraces at least 61.8% of wave-1. So it is a safe approach to expect wave-C (Micro degree – marked in orange) to reach at least the golden ratio, before the market takes off to the bullish move marked with the red arrow.
Any short positions will be very short term. I personally would avoid any short trades, unless the structure and the wave count changes significantly. But my real interest is in the bullish wave to come. If the correction continues to go deeper, it’s highly probable that the market could reverse at 61.8% or 78.6% levels. So it’s a good idea to watch for any weakness in bears, around those levels.
What is you trade plan or forecast for next week? Feel free to agree or disagree in the comments section below. If you liked this forecast, please share it with your friends.