Pound-dollar is really in range and there is still no clear direction as of yet. Last week we expected a rally to test the presumed upper band of the correction. The development of the current primary degree corrective structure is quite decisive. Because if it turns out to be a triangle, then there will be changes in the wave count.
This in fact resembles a running triangle. But its not conclusive until completion of D wave and the commencement of the E wave. In terms of wave analysis, we will have to shift the 4th wave label to the triangle-completion and expect the wave 5 impulse down (which we assumed to be completed at the lowest low.)
In this case, at the completion of the triangle we might have a short trade set up. But in case of the last week’s analysis, the Pound-dollar could be stuck within a range for months to come.
Either way, a bullish wave to test the upper boundaries of the correction is inevitable, whether its the upper boundary of the presumed triangle, or much higher hypothetical boundary to mark the 4th-wave-high of the Cycle degree.
Is the wave 3 of the Cycle degree (marked as III) complete? This is the ultimate question. There is a strong case to say NO as well. Although the above count is completely valid as of now, this could change if we see a triangle complete in the H4 view, as explained in the previous image.
So the GBPUSD does not seem tradable at this point. But its important to get the feel of the Cable in order to trade other Pound crosses – e.g. Pound-yen.
Besides, the GBP has been and will be a major factor in other forex instruments. Obviously it directly influences the Euro and other European currencies. But the Cable could also influence order-flow, to and from non-forex markets as well. e.g. Gold and Silver.
Trade call for next week?
For me, trades in the Pound-dollar itself is very unlikely. Mainly because the corrective structure or the direction within the waves of higher magnitude, is not conclusive enough. But other GBP crosses may have some interesting opportunities e.g. GBPJPY, GBPNZD and GBPAUS.