EUR/GBP is sporting some clean waves from an Elliott Wave perspective. Since finding a low on August 5, 2015, prices have been advancing in impulsive fashion followed by corrective setbacks. It appears the correction that began on February 11, 2016 is nearing a termination point. If this interpretation and wave count is correct, then prices would be supported on a move up towards .8150.
According to the wave count below, we are anticipating a wave 4 low at yesterday’s low or with one more possible retest near .7560.
[Image 1]
Wave 4 typically retraces approximately 38.2% of wave 3. That level comes into play near .7550. Likewise, the equal wave measurement from the April 7 high to yesterday’s low is near .7560. Additionally, the 200 Day Simple Moving average sits around .7519 (not shown). As a result, there are a variety of support levels arriving near yesterday’s low.
If correct, then we can anticipate another 5 wave move higher. Wave 5 would equal wave 1 near .8100. Wave 5 would be 61.8% of the length of waves 1 through 3 near .8150. So initial target levels can be set near .8100, though higher levels exist.
If prices trade below the wave 1 high of .7493 then this wave count in invalid and we’ll reconsider other patterns.
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