I'm uncertain about the most likely outcome for the British pound at this time, but I haven't published on the pound in a while, so I want you to know what I'm thinking.
I have labeled the chart with the Elliott wave count that I believe is the most likely. There is, however, one big problem with this count: it violates a critical Elliott rule. Submicro wave 4 enters the price territory of submicro wave 1. I believe this is because either 1) it is an occasional exception that sometimes occurs in the forex market, or 2) the wave count is wrong. Robert Prechter has spoken before about how sometimes forex pairs don't follow Elliott patterns perfectly because two markets, with two different social moods, are competing at the same time. But he does acknowledge that these are exceptions, and most of the time, most forex pairs follow the wave principle. Either this is an example of one of these exceptions, or the wave count is wrong.
I believe the primary wave count above is quite nice. With the exception of the broken rule, all of the subwaves follow Elliott patterns, and the whole structure looks remarkably natural in terms of wave proportions. This count also agrees with the long-term wave count that I talked about here:
It does appear that the pound is ready for a major trend reversal according to the long-term count, and a five-wave-up pattern is what we should see if this is correct.
Be that as it may, a broken rule is still a broken rule. While it's possible that it is an exception as described above, statistically, it probably is not. I've experimented with a number of possible bullish counts, but all of them look pretty unnatural to me at this time. I have labeled the chart with the most natural alternate count that I could find (an ABC zigzag), but this count is bearish. This count seems to contradict the long-term count to me, but in the short term, it seems like the best alternative. The nice thing about the alternative count is that there are no broken rules because even though submicro wave 4 enters the price territory of submicro wave 1, the whole structure is an ending diagonal rather than an impulse, so this overlap is allowed. There are many other possible counts that I think are considerably less likely that I haven't labeled on the chart in order to make it easier to read.
If prices decline below the big red line at 1.20455, the odds of the primary count with the exception being correct essentially go to zero. In this scenario, there will be two broken rules; both the one already mentioned and micro wave 4 will have entered the price territory of micro wave 1. I believe this count would be too unlikely to consider correct.
A much better option may become apparent with time. If anyone has a better wave count, please let me know.
I have labeled the chart with the Elliott wave count that I believe is the most likely. There is, however, one big problem with this count: it violates a critical Elliott rule. Submicro wave 4 enters the price territory of submicro wave 1. I believe this is because either 1) it is an occasional exception that sometimes occurs in the forex market, or 2) the wave count is wrong. Robert Prechter has spoken before about how sometimes forex pairs don't follow Elliott patterns perfectly because two markets, with two different social moods, are competing at the same time. But he does acknowledge that these are exceptions, and most of the time, most forex pairs follow the wave principle. Either this is an example of one of these exceptions, or the wave count is wrong.
I believe the primary wave count above is quite nice. With the exception of the broken rule, all of the subwaves follow Elliott patterns, and the whole structure looks remarkably natural in terms of wave proportions. This count also agrees with the long-term wave count that I talked about here:
Be that as it may, a broken rule is still a broken rule. While it's possible that it is an exception as described above, statistically, it probably is not. I've experimented with a number of possible bullish counts, but all of them look pretty unnatural to me at this time. I have labeled the chart with the most natural alternate count that I could find (an ABC zigzag), but this count is bearish. This count seems to contradict the long-term count to me, but in the short term, it seems like the best alternative. The nice thing about the alternative count is that there are no broken rules because even though submicro wave 4 enters the price territory of submicro wave 1, the whole structure is an ending diagonal rather than an impulse, so this overlap is allowed. There are many other possible counts that I think are considerably less likely that I haven't labeled on the chart in order to make it easier to read.
If prices decline below the big red line at 1.20455, the odds of the primary count with the exception being correct essentially go to zero. In this scenario, there will be two broken rules; both the one already mentioned and micro wave 4 will have entered the price territory of micro wave 1. I believe this count would be too unlikely to consider correct.
A much better option may become apparent with time. If anyone has a better wave count, please let me know.
