Pivot Near Standard Deviation Channel and Measured Move
Updated
I've been watching the Sterling closely lately. Though I think we are looking at long term weakness in Sterling, this chart paints a compelling picture of some near term strength brewing for GBP. (GBP/USD paints a similar picture too).
2 points that converged near 164.60:
*1 year standard deviation channel typically contains prices
*1.618 extension for wave iii - in Elliott Wave terms this is common for a 3rd wave
As a result, I wouldn't be surprised to see the pair move back towards 174. If you decide to trade to the long side, consider flattening prior to 174 because this trend is still entrenched to the downside. You don't want to get caught on the wrong side of a strong trend. With the said, using yesterday's low as a risk level, there is a good risk to reward ratio available on a conservative trade.
See how the JPY pairs fit in with the Q1 Yen forecast here (download with a free registration).
If strength does ensue back towards 174, it may offer an opportunity to return to the short side. We'll see how the waves develop.
Good luck!
2 points that converged near 164.60:
*1 year standard deviation channel typically contains prices
*1.618 extension for wave iii - in Elliott Wave terms this is common for a 3rd wave
As a result, I wouldn't be surprised to see the pair move back towards 174. If you decide to trade to the long side, consider flattening prior to 174 because this trend is still entrenched to the downside. You don't want to get caught on the wrong side of a strong trend. With the said, using yesterday's low as a risk level, there is a good risk to reward ratio available on a conservative trade.
See how the JPY pairs fit in with the Q1 Yen forecast here (download with a free registration).
If strength does ensue back towards 174, it may offer an opportunity to return to the short side. We'll see how the waves develop.
Good luck!
Note
Sterling has been on a roll for the past 24 hours. I plan to publish a chart on the GBPUSD today, but we appear to be in a GBP strong short term cycle. The 'easier' pips are probably already made on this move higher if we are in a wave iv.Wave iv typically chews up time more so than price. As mentioned in yesterday's post, under the wave count above, this trend is still firmly pointed down, so risk will need to be managed well before we see 174...because we may not see 174 due to the longer term down trend.
Note
So 174 was hit on the BOJ news last night. I'm leaning towards this leg higher being the first leg of a wave iv which suggests a sell off of a 300 pips or more.I've just updated the GBPJPY on a new post. You can see it here:
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