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GBP/USD Bears: Time to Watch the Market Very Closely
Elliott wave patterns in cable are flashing a warning signal

By Vadim Pokhlebkin
Tue, 05 Feb 2013 16:00:00 ET
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"British Pound Continues Its Downward Spiral," said a recent Wall Street Journal headline.

 

"The U.K. pound extended its losses against the dollar and euro amid worries that the Bank of England is preparing to take aggressive steps to boost growth. Sterling has fallen steadily this year, as indicators point to the U.K. economy entering its third recession since 2008."

 

True, GBP has been falling, and so has GBP/USD, the sterling-dollar exchange rate known to forex traders as "cable." The circled portion of the price action in this chart from our Currency Specialty Service puts this year's drop in perspective (Elliott wave labels not shown): 

 

On the daily chart (above), the decline looks more or less like a straight line. However, if you "zoom in" on a shorter timeframe (below) a pattern emerges -- an Elliott wave pattern.

 

Currency Specialty Service saves the details and the exact price targets for subscribers, but here's what we can reveal in this column.

 

The latest sideways consolidation in cable (you see it between the converging blue trendlines in the chart below) looks like an Elliott wave pattern called a "triangle."

 


 

Triangles usually appear in wave 4 of the basic 5-wave Elliott wave sequence. Which means that if you've been riding cable's downtrend, it is time to pay close attention to the price action.

 

Get the details inside Currency Specialty Service online now >>

 

 

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