Anyway!.....Cable Is Bearish
Elliot wave theory is the most complete technical tool to understand the position of price in the framework of the market.. It clearly tells us the degree of any trend and correction within a market structure; when they start and end and what to expect afterward.
The long term analysis of the Cable for more than 20 years can be analyzed by the two charts below.
The rally from 1.363 to 2.122 was a clear zigzag corrective pattern ( a possible wave 2, 4 or B) which is expected to be followed by a 5-wave sell off. The sell of started from 2.122 and has probably completed first two waves, the 1st wave was completed at 1.42100 in a truncated 5th wave followed by a zigzag correction which ended at 1.7230. Price went down in a big momentum to 1.4551.
The dip from 1.72 is expected to be a 5-wave move in a smaller degree. The rally from 1.4551 is corrective and price is expected to sell on a large trend.
The second wave analysis below also supports the long term bearish movement.
The price pattern that ended at 2.1180 was an ending diagonal. An ending diagonal characteristically ends a 5-wave impulsive move. This move is expected to be followed by a 3-wave correction.
The resulting correction is not clear but if the count above holds, we will probably see a zigzag correction. A zigzag correction is a (5,3,5) wave . The first 5-wave ended at 1.4160 followed by a 3-wave correction which ends at 1.72. A 5-wave move is expected to break 1.45 below.
That is how we use elliot wave theory to forecast price movement.
Has the present rally from 1.452 ended to pave way for the sell off?. We answer this question by analyzing price actions in the hourly charts. The hourly chart below show the position of price in the short term.
A double zigzag is probable which, provided price breaks the intraday 1.5695 resistance, could end at 1.65 before the bearish move. A break below the red trendline could mean that price is already for the bearish move especially if the momentum is high.
This is a forecast to determine price direction and zones. We should look for tradable patterns along the direction of forecast. If price moves contrary to the forecast, we can reanalyse and wait patiently for the right time to pull the trigger. It's about spotting high probability trades.
A winning trader does not follow price everywhere. He simply allows the market to connect to him before he connects to it.
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