Thursday, July 17, 2014
Elliott wave analysis of EUR/GBP - Long term target reached, look for a bottom soon
With a low printed at 0.7887, we are just 4 pips above the target-area between 0.7868 - 0.7883. Whether we will see a perfect test of the target-area or not it not important to my, what's important is, that a long term bottom should be expected soon for a major rally.
The first strong indication of a bottom being in place, will be a break above minor resistance at 0.7920 and more importantly a break above resistance at 0.7980, which will confirm that a bottom is in place for a rally to at least 0.8155 on the way higher to 0.8467 and higher.
You might wonder, why I expect a long term bottom in the 0.7868 - 0.7883 area?
The first reason is, that at 0.7883 wave 2 will have corrected 88.6% of wave 1. Second waves area allowed to correct 100% of wave 1, but a bottom will often be found near the 90% corrective target.
The third reason is, that we can see a clear divergence between price (making new lows) and the indicators (not making new lows). This is a sign of loss of momentum and tells us, that a bottom could be seen soon.
All together indication of a possible bottom being in place soon. Only a break below the starting point of wave 1 at 0.7763 will invalidate the long term bullish count.
If you like this post, then you should consider joining the Elliott Wave Surfer Service. Click at the link and see, what I have to offer