British Pound (GPB/USD) Targeting a Significant Downtrend to 1.8600
The US Dollar strengthened late last week, especially against much a weaker British Pound, which ended Friday on a weak 1.9430. The Pound earlier in the week again failed to get anywhere near breaching the previous high of 1.9890.
- Price Pattern - The Pound broke below the Symmetrical triangle off of the 1.9890 high late Friday. This initially targets a move equivalent to the size of the pattern or 5 cents.
- Support - Heavy support is at the 192.60 lows, should this break then the next significant support coincides with the lows of 1.8515 and 1.8600
- Trendlines - The Pound managed to hold the uptrendline support on Friday at 194.30, virtually at the trendline level, should this trendline break then that would confirm the bearish pattern
- % Levels - The 50% support level of the rally from 1.7250 lies at 1.8550, this conveniently coincides with major support levels along previous lows.
- Elliott Waves - The Elliott wave count implies an immediate 5th wave peak, and thus implies a correction of the rally from 172.50, which confirms the trends analysis.
- Time - The Pound is correcting an up move spanning some 10 months, therefore the Pound could correct / drift lower for as much as three months or into May 2007.
Conclusion - The GBP is targeting a significant downtrend to 1.8600 by early May 07. The key trigger levels for this trend are a break of 1.9400 and 1.9250. Once confirmed, the downtrend is expected to be a correction to the uptrend from 1.7250, and therefore does not imply an end of the bull market. Current Resistance lies at the previous high of 1.9661.