When you draw a connecting the end of wave 1 & 3, then duplicate that line to the end of wave 2 to obtain an approximate area for wave 4.
Also, if you draw a trend channel within circle wave 'y' (grey ), the equal wave measurement appears near 7560 which was tagged Wednesday morning.
EURGBP may bounce around here a little, but the point is this move lower appears mature. The top of wave 1 is the risk to the trade, so a stop loss could be placed near .7490.
Couple this idea with the EURUSD post from earlier this week which also appears to have some potential.
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There are a lot of relationships taking place on this pair. I welcome your questions on EW.
Best of luck!
In the EURGBP example above, I don't know if prices are going to bounce higher or fall off a cliff. However, there was a hot spot of support and higher probability bullish outcomes. On the chart above, waves 1-2-3 are fairly straight forward. Could it be an A-B-C zigzag? Possible. It would imply weakness which we got. However, the weakness beginning Feb 11 never really morphed into 5 waves down...it continued to chop around sideways and moved lower in baskets of 3 waves which is corrective.
I can't fit wave 'X' as a 5 wave motive wave. Therefore, even if the correction continues, the equal wave from April 7 to May 25 suggests pressure to the upside.
With all of that said (and with ECB stepping up to the podium tomorrow morning), where do we stand now? A break that holds above the trend channel is significant. However, we have short term 5 waves up that may need a partial retracement to correct on. That correction would need to hold above 7572 to keep the wave count above alive.
Likewise, GBPUSD is at temporary support so I wouldn't be surprised to see it trade to 1.45 which may drag EURGBP lower a little.
Close to down trendline now, maybe tomorrow..., curious to see if it breaks or bounces... Also back at H&S neckline...
Possible wave 5 (if my bullish count is correct) and/or cypher if we break to the upside..., to the downside possible 3 drives pattern and/or wedge...
That's how I see it for now.
But that's just my thoughts, as said, technically your conclusion is probably the only one that fits the structure best!
Allthough, an alternate count for the daily TF is leading diagonal (1) of circled 3..., but that looks far fetched.... and would mean a massive move is to come...
Anyway, thanks alot for your reply, I still have alot to learn so it's great to share idea's like this!
I think it is wave 5 now because when you draw a trend line connecting the top of waves 1 & 3, then duplicate that line to the end of wave 2. Ok, so price action pierced that duplicated trend line so it is behaving like a wave 4. If price was supported and didn't quite reach the trend line, the it elevates the potential that the sell off was the first of a complex correction. Additionally, the move higher is appearing like a motive wave which is what we need in wave 5 as well.