Wave 2 stopped in between 50% and 61.8% of wave 1.
Price has keep capped my the weekly base
What to look for.
look for a 3 wave move up to form wave (2). When this has formed enter the trade on the break of wave b with a stop above wave c. I will post confirmation when this happens.
The top of wave 4 coincided with a 60 touch
Price is also bound by the monthly
If price moves above wave 2 in circle (1.5661) the count is invalid.
A break of the Neckline would also help to reinforce the view that we have a pattern.
My first target id 1.618 of wave 1 which comes in at 1.4693
Breaks of 1.5330 and 1.5170 will add extra confidence to this view.
1) The June high (1.5929) coincided with the 1.382 Fibonacci extension of what I have labelled as a-b. So far I have labelled that high as a wave 4 but it may change to a wave 2. Of course if it does end up being a wave 2 the move down will be sharper.
2) When it hit this peak RSI also held the 50-60 Bearish resistance level
3) Finally price is being capped by the base of the weekly Ichimoku cloud and the signal line is also beneath the cloud that signals trend continuation.
Fundamentally I thought it was interesting that on Friday morning MPC Member Broadbent was on Radio 4 saying that there is no rush to raise interest rates in the UK http://www.cityam.com/221867/bank-england-governor-ben-broadbent-says-foolish-pre-announce-interest-rate-hike-date . This was strange as governor Carney did a 1hour press conference the day before.
This week I am looking to a speech by Dudley from the FED today. UK Employment data on Wednesday (especially the average hourly earnings figure). A disappointment with wage raises will certainly push back the date for a BOE rate rise. Finally US retail sales on Thursday, I feel that a beat here would give the FED extra confidence that inflationary pressures are on the rise and increase the probability of a rate rise.
I will be keeping a close eye on the neckline of my original chart and also the 200day moving average. A close below this would increase the probability of this idea in my opinion.