I've been a little confused by the price action of the British pound for about the past week and a half because the preferred count violated an Elliott rule and the best alternate count contradicted the long-term count. Fortunately, I recently saw a great idea by JoeChampion who identified the head and shoulders pattern in the pound. You can read his idea here:
The head and shoulders pattern usually translates into a 3-4-5-1-2 pattern in the Elliott wave model. The 3-4-5---- matches the alternate count of submicro degree that I published the other day here:
After experimenting with adding a ------1-2 count based on the head and shoulders pattern and double-checking the subwaves, I think this count is quite plausible. It's not exactly a textbook count because the wave degrees don't align perfectly, and it seems that the ------1-2 portion is part of a large leading diagonal. But wave degrees don't always have to align, and the leading diagonal does look natural.
Because this count is bearish, it does contradict the long-term count that I was using but not by much, we only have to adjust the end point of minute wave 5. This changes minute wave 5 into an ending diagonal rather than an impulse. Here is the updated long-term count:
As you can see in the long-term count, minute wave 5 will probably take the pound dangerously close to the March 16, 2020 low of 1.14098 (big red line) that is acting as the end of the long-term correction that began in November 2007. If prices decline below this level, not only are we not in Intermediate wave 2, the long-term correction since 2007 still hasn't finished yet, which will alter the outlook of the pound considerably.
I do like this count, but because there are some non-textbook features, I would still say that the confidence level of this count is below that of the euro's count. On the bright side, the outlook for the pound now looks pretty similar to the euro, which makes sense with their recent correlation.
The head and shoulders pattern usually translates into a 3-4-5-1-2 pattern in the Elliott wave model. The 3-4-5---- matches the alternate count of submicro degree that I published the other day here:
Because this count is bearish, it does contradict the long-term count that I was using but not by much, we only have to adjust the end point of minute wave 5. This changes minute wave 5 into an ending diagonal rather than an impulse. Here is the updated long-term count:
I do like this count, but because there are some non-textbook features, I would still say that the confidence level of this count is below that of the euro's count. On the bright side, the outlook for the pound now looks pretty similar to the euro, which makes sense with their recent correlation.
