Last week’s blast higher puts our top count on the shelf for the moment. The sharp nature of the rally makes it look like wave (a) of 2. So, a down start to the week, followed by a push higher to test the broken trendline for wave 2 is our best count. The alternate essentially follows the same path. It suggests that the October low is wave (D) of the ongoing triangle for wave ((X)). Regardless, it is still a corrective rally, and the Sustainable Bear reading into the October low means prices will eventually head down below parity.
Here too, the rally was a bit more than expected, but the pound is likely to head lower. The near term trendline has been broken, but there’s still plenty of overhead resistance from the wave (3) and B of (4) low. We’re looking for prices to top and resume their decline sometime this week. Look for a reversal and follow through bars to return to an aggressively bearish stance.
Prices held support and rallied back above the down channel line. While a near term collapse would save the top count, we’ve got serious doubts. The entire move since the wave 1 low looks like a series of corrective moves, but prices have remained elevated. Wait for clarity.
The alternate count from last week is the operative one now. Prices pushed above critical resistance and now should be pushing into the .7500 area prior to a lasting top. Still, we have no Sustainable Bull reading, yet, and ideally we won’t get one into the wave Z top. Nonetheless, it’s too early to be bearish.
We can’t confirm the wave (B) top yet, but we suspect it’s not too far off. Once again, we have a hard time figuring what makes the Loonie rally versus the dollar, which would call for a sub-1.2400 reading, but that’s what the count calls for. We can look for a break of the 1.3313 level to confirm that wave (C) down is underway. Notice that we still don’t have a Sustainable Bull reading which would “confirm” the breakout above 1.3300.
A break above the wave (b) high would likely have us shifting to the alternate count, but until that happens, we’re sticking with our call for one more sharp tick down. That fall will likely be quickly reversed, and then a very sharp rally will likely begin as wave III gets underway for the next couple of years. Something bad is brewing in Japan.
The time zone we reference on our charts is Pacific Standard Time. Therefore, the U.S. cash market opens at 6:30 AM PST and closes at 1:00 PM PST.