Hello fellow traders! Dive in to explore our quick take on GBP/USD’s Elliott Wave action—happy trading!
Wave 1 & Wave 2
The initial leg up (Wave 1) established the start of an impulse.
Wave 2 appears to have formed a flat correction—a relatively sideways pattern characterized by three sub-waves (A-B-C), where Wave B can sometimes move slightly beyond the start of Wave A.
The flat structure in Wave 2 set the stage for a strong Wave 3 advance.
Wave 3
Typically the most powerful and extended wave in an impulse, Wave 3 pushed prices higher in a clear, sustained trend.
Fibonacci extensions often confirm Wave 3’s prominence, with price sometimes reaching 161.8% or more of Wave 1.
Wave 4
Following Wave 3, a corrective Wave 4 is unfolding. Because Wave 2 was a flat, the principle of alternation suggests Wave 4 could take a different shape, such as a zigzag (A-B-C) or a triangle.
Currently, the structure hints at a zigzag (a more vertical three-wave pattern), but there’s also a possibility of a triangle if price consolidates in converging trendlines. Wave 4 triangles are fairly common, especially when they alternate with a flat in Wave 2.
Potential Outcomes for Wave 4
Zigzag Completion: If the corrective phase remains a zigzag, we’d look for a clearer three-wave structure (A-B-C) to complete near typical retracement levels (e.g., 38.2% or 23.6% of Wave 3).
Triangle Formation: If the market continues to range and create overlapping waves, watch for lower highs and higher lows converging into a triangle. This pattern could prolong Wave 4’s duration before the final Wave 5 upswing begins.
Wave 5 Outlook
After Wave 4 concludes, look for Wave 5 to emerge.
Targets often use Fibonacci projections—e.g., measuring Wave 5 against the length of Wave 1 or against the net distance of Waves 1+3.
A common extension is the 61.8% or 100% projection of (Wave 1 + Wave 3), which can help identify potential price levels for Wave 5’s completion.
Key Takeaways
The broader picture shows an impulsive five-wave move in progress.
Wave 2 being flat suggests Wave 4 is likely to be a different pattern (zigzag or triangle), aligning with the principle of alternation.
If Wave 4 forms a triangle, it may extend the corrective phase, but the ensuing Wave 5 rally often emerges strongly once the triangle completes.
Monitoring Fibonacci retracements and extensions will be crucial to pinpoint likely support for Wave 4 and resistance targets for Wave 5.
As always, monitor price action and confirm the wave structure with technical indicators or additional confluence before taking a trading position.
Wave 1 & Wave 2
The initial leg up (Wave 1) established the start of an impulse.
Wave 2 appears to have formed a flat correction—a relatively sideways pattern characterized by three sub-waves (A-B-C), where Wave B can sometimes move slightly beyond the start of Wave A.
The flat structure in Wave 2 set the stage for a strong Wave 3 advance.
Wave 3
Typically the most powerful and extended wave in an impulse, Wave 3 pushed prices higher in a clear, sustained trend.
Fibonacci extensions often confirm Wave 3’s prominence, with price sometimes reaching 161.8% or more of Wave 1.
Wave 4
Following Wave 3, a corrective Wave 4 is unfolding. Because Wave 2 was a flat, the principle of alternation suggests Wave 4 could take a different shape, such as a zigzag (A-B-C) or a triangle.
Currently, the structure hints at a zigzag (a more vertical three-wave pattern), but there’s also a possibility of a triangle if price consolidates in converging trendlines. Wave 4 triangles are fairly common, especially when they alternate with a flat in Wave 2.
Potential Outcomes for Wave 4
Zigzag Completion: If the corrective phase remains a zigzag, we’d look for a clearer three-wave structure (A-B-C) to complete near typical retracement levels (e.g., 38.2% or 23.6% of Wave 3).
Triangle Formation: If the market continues to range and create overlapping waves, watch for lower highs and higher lows converging into a triangle. This pattern could prolong Wave 4’s duration before the final Wave 5 upswing begins.
Wave 5 Outlook
After Wave 4 concludes, look for Wave 5 to emerge.
Targets often use Fibonacci projections—e.g., measuring Wave 5 against the length of Wave 1 or against the net distance of Waves 1+3.
A common extension is the 61.8% or 100% projection of (Wave 1 + Wave 3), which can help identify potential price levels for Wave 5’s completion.
Key Takeaways
The broader picture shows an impulsive five-wave move in progress.
Wave 2 being flat suggests Wave 4 is likely to be a different pattern (zigzag or triangle), aligning with the principle of alternation.
If Wave 4 forms a triangle, it may extend the corrective phase, but the ensuing Wave 5 rally often emerges strongly once the triangle completes.
Monitoring Fibonacci retracements and extensions will be crucial to pinpoint likely support for Wave 4 and resistance targets for Wave 5.
As always, monitor price action and confirm the wave structure with technical indicators or additional confluence before taking a trading position.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.