GBPUSD: 06/05/2017

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Charted above is my phasing analysis on the GBPUSD currency pair. The structure on the sterling is very clear from a cyclical perspective and the similar cyclical circumstance can easily be pointed out. It is important to note that the 18 year cycle low has not yet been realized in terms of the GBPUSD. It is worth noting that we have reason to believe that the 18 year cycle trough is likely to form a straddle based on the similar cyclical circumstance of 2001/2. The projection for the sterling is slightly different than that of the EURUSD which makes sense because of Brexit considering that the United Kingdom is no longer part of what was formerly known as the European Economic Community and now the European Union. Let us now take a look at the projection for the sterling going forward.

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The chart above presents the similar cyclical circumstance in terms of the British Pound. The similarity between both periods is simply astounding. We have reason to believe that what followed the similar cyclical circumstance in the past is likely to follow where we are right now. The picture looks significantly bullish for the sterling going forward although I would not go as far as stating that new highs relative to the 2007 top will be realized, the reason why I state that is because the Kondratieff low has been taken out which is indicative that sigma el is currently pointing south hence a lower high is a likelier scenario in terms of the pound sterling going forward.

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The chart above presents the forecast for the British pound along with approximate dates of cycle highs and lows. We have reason to believe that we will soon enter a corrective pull back to the downside that is likely to last till the end of the year. It is likely to be a choppy to sideways move rather than an outright swift decline considering that time is the factor that determines all things and there still seems to be significant time left for us to hit the 18 year cycle trough that should, once again, form a straddled trough based on the similar cyclical circumstance.

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It is also important to note that at the most recent 40 week trough the commercials hit an all time record high of purchases of the British pound in the futures market. Such record purchasing is certainly indicative of a significant trough in the price of the sterling. This provides us with more evidence to expect a straddled trough since such high level of purchasing is usually indicative of an extreme low in price rather than a low that is to be exceeded. It is worth noting though that the EUR witnessed record purchasing by the commercials on March of 2015 and the low was exceeded slightly. This is why I would not recommend purchases until late this year considering that there seems to be a high likelihood of an 18 year cycle low at around that time vicinity. We will obviously need to wait for confirmatory price action to turn our analytical thoughts into reality.

Ahmed

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