a 500 pip move was called on the previous post on the GBPUSD that has materialized precisely as anticipated. I was looking for the completion of a deep crab pattern to the upside with a target of the 1.3 handle when the GBPUSD was trading at approximately 1.25. It is important to note that we are currently at the Potential Reversal Zone of the harmonic pattern highlighted above. It is unlikely that prices will simply pierce through this pattern without having a significant pull back to digest some of the recent gains seen in this currency pair. It is also important to note that the projection, which will be presented shortly, also suggests a significant pull back prior to the continuation of the advances which is reason enough for profits to be realized in this currency pair prior to loading up on the sterling once again against the USD for a sizable move higher.
Charted above is the projection I have on this currency pair going forward. It seems evident that the 18 year cycle low has not been realized yet but we have reason to believe that it will form a straddled trough based on the previous 18 year cycle position. This means that the EUR and the GBP are about a 40 week cycle out of phase. It gives me slight discomfort to have such a different view on both currency pairs which is why I am sticking to the EURUSD in terms of longs going forward while I wait for the picture to become clearer on the sterling.
The Elliott wave pattern on the daily chart also suggests that we are likely on the verge of a fourth wave correction that would be of the same degree as the decline that occurred from early Feb to mid March earlier this year. This is yet another reason to be cautious on the long side and take profits on what would have been a wonderful 500 pip trade if one would have followed the outlook mentioned earlier last month.