From looking at the decline on the daily chart... It is clear the decline from last year has not been impulsive... Thus I expect another wave up... I think we may be in a large triangle... Maybe one more rally back up to the 250.00 area in a large wave E before a decline to a new multi year low...

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Nice charts Brad

Now what would that mean for the stock markets, new highs on the dow!! after all most of the carry trades have been used to inflate the world wide stock markets. But inorder for the GBP JPY to get to levels of 250 then the UK interest rates would need to rise to the levels of a year ago. Could happen which would indicate that this down cycle may be short lived? Could inflation come to bite us on the bum?

PS could you look at Jimbos post above , do you have any long term charts of the EURGBP, thanks.

Ray

Sorry about the wide charts I posted with the GBPJPY everyone... Hope everyone can see them alright .. I wanted to make sure the candles were also visible on the charts so I had to make them a little bit wider...

Although in your mind interest rates may need to reach a certain level to drag price to a new high in GBPJPY I can assure you these thoughts did not cross my mind when I was looking for a pattern in the chart... This is about patterns... I could care less if Great Britain drops interest rates to Zero !... Waves speak clearer to me then any monitary policy committee ...

I am just finishing up a chart of EURGBP for you and Jimbo .. I'll be right back with it

Ray.. Jimbo.... Here ya go ... EURGBP... Looks like we're coming into a resistance area at the prior high ... Maybe we get our 4th wave correction soon ... I believe there is enough thrust in this pair to send it past the prior high though .. niether would surprise me.. "B" waves can go much past the prior high ... I see no relief in sight for this rally as of yet

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I am of the opinion that the current wave (sort of flat, meandering like a snake, forming a triangle) is more typical for the nature of wave 4.
Waves 2 form usually a zig zag, not a triangle.
It is true that triangles take a long time to break, but once they do there is a quick action in the direction of preceding impulse wave.

Mike

GBPJPY looks like it's entering a 3rd wave on the 4 hour chart

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Brad, thanks I guess you and Jimbo have nailed it in the coffin for the great GBP. I hope Gordon brown watching and better get his skates on for a reforendum on the Euro.

Ray

The USD/CHF is offering the clearest count for the dollar as a whole. So if this count is right, 1.0110 should remain in tact, and a wave 3 should be underway soon. I'm using this pair to dictate the overall dollar picture for other pairs. I closed my short USD/JPY position right after it broke 102.00 and violated my bearish triangle count. But I'm still short the USD/CHF and long the EUR/USD. I have more confidence in the specific USD/CHF count and feel that it ultimately has the best opportunity as long as the triangle remains in tact.

American-T

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Hello ladies and gents,

I hope you don't mind me asking a newbie EW question. If the final leg of the euro advance is starting shouldn't the internal structure of the wave be impulsive? What confuses me is what i've circled in red... they look like zigzags not impulsive waves... although the overall wave does seem to develop into something that looks a little more impulsive.

Would anyone mind enlightening me?

Thanks,

Silver

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Now here's a 1hr chart that shows the pair might be rolling over. Observe the price action (red arrow) and the stochastics (circled). Talk about a great risk/reward against that recent high. Or perhaps stretch it out to 1.0120. Remember, I'm using this to represent the dollar as a whole.

American-T

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Hey Guys,

I think GBP/JPY is heading much lower from current levels. The long term chart is showing the same downward impulsive patterns as USD/JPY and EUR/JPY. However, where USD/JPY has a triangle in the fourth wave and EUR/JPY sports an expanded flat in the fourth wave, GBP/JPY has a simple zig-zag. The internal structure of that zig-zag breaks down into a 5-3-5. The shorter term (weekly/daily) is showing a clear impulse wave. The weekly chart below shows that price is currently correcting in a wave four before one more leg lower. Those five waves would then complete wave one of wave five on the monthly charts.

Back to the weekly chart... Wave one was 3183 points long. Wave three extended just beyond the 161.8% fibo extension of wave one. As per EW Theory, when wave three is extended waves one and five are often related by equality. So, we should be looking for another 3200 point move to the downside once wave four resolves itself.

Looking to the future, the 38.2% retracement of wave three (weekly chart) is at 211.15. Assuming that wave four retraces to somewhere near that level, we can take 211.15 and subtract 3183 points to get a wave five target price of 179.32. A rising trendline drawn off of the lows of the fourth wave on the monthly chart just so happens to intersect the 179.32 area right where you would expect wave five to end. How about that... This idea is shown on the third chart below.

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AT,

I see a lot of activity in the crosses. It doesn't look like the USD is the primary interest at the moment. EUR/CHF, EUR/JPY, etc.

Since the early EUR selloff it looks like all the movement is cross related. Might just be me but that's what it seems like.

The CHF formation seems right the way you present it. Am I going to wake up in the morning and see it 200 pips higher?! LOL. DEJA VU all over again. :-)

Great work, Justy
In fact, this is the same pattern that I observe. Especially, I like your SYSTEMATIC approach, starting with the bigger picture and going to smaller and smaller yet.
I realize that we are going through a correction phase and corrections are -by definition- quite treacherous. Bob Prechter calls them "suckers play" and "speculators paradise". We all know, why.
So, step carefully, guys. Do not be pulled into a bull trap!!!

Mike

Yes, it is rough trading corrections. But once we see a completed five wave sequence on the weekly chart, that would then complete a larger wave one. Then of course we'll see a large wave two correction. But after that, price will be in a wave three downtrend that could last quite a long time. So there should be some awesome opportunities on both the short and long term here pretty soon.