Those who track our Elliott wave analysis and ideas will know that for me the most important is clear price action. But the question is what is clear? For me, clear price action is one that allows me to recognize the pattern immediately. But not the complex pattern, the simple ones, such as impulse or correction, zigzag, etc.
So what do we see on the chart of GBPAUD below? Well, it’s clearly a strong rise from the end of September, after the pound capitulation. Notice that recovery from that low is strong and sharp, without any overlaps. Normally that’s an impulse where we can count five waves up. Impulses will also see a three-wave set-back which is now in play or possibly already completed at the lower channel line. So if we are correct then the upward move should resume now, possibly even to 1.85. But remember, sometimes corrections are complex and tricky, so even deeper prices here for B are possible but still part as a contra-trend move. So, nice second support is at 1.72/1.173.
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