GBPUSD Weekly Elliot Wave analysis

GBPUSD is currently in a wave 3 or wave 5 of a long-term corrective wave C. We probably are at the begining of a wave 5 of that C corrective wave. So, for next week, I am projecting a bullish run up to 1.68 (161.8 fib extension of the last correction) and then the continuation of the big bearish trend, that will eventually take us below 1.35. If we’re in a wave 3 of C (though not likely), we may get a bigger bullish rally before we go down again (maybe up to 1.7320).

Taking into account that EURUSD has a strong correlation with both GBPUSD and EURJPY, we should expect the same iminent bearish continuation for both. But, as I said, next week we will probably witness a final bull rally, so I’m bullish on these pairs next week. If this is the case, then EURUSD may have a top near 1.4719 high of December 18th, 2008. So I expect a break of 1.4330 to the upside on the EURO and a break of 1.666 on the GBP. A possible top on EURJPY would most probably be 145.46 and I’d expect a break of the 139.21 high.

These highs could be taken out tuesday or wednesday, as we have a lot of important news coming out. So watch out for this and good luck!

GBPUSD support and resistance lines. Click on the image to zoom in

My GBPUSD H4 chart for 18th January 2009

Or click here to see the “mind-map” online.

Cheers!

EURUSD

EURUSD Elliot Wave

EURUSD seems to be displaying a perfect Elliot Wave pattern on the H4 chart. If this outlook is correct, then next week we should see a retest of the 1.3080 – 1.3000 area, followed by a big bullish run till 1.3800 – 1.3830 area. A breach below 1.3000 would invalidate this view and I will look to sell at a retest of wave 5’s low. If, instead, price will bounce off 1.3080 – 1.3000 and break 3’s low at 1.3333, I will look to buy at retests of former resistance lines that become support and finally I will sell short at 1.38 for some nice profit. This is my plan for the EURO.

GBPUSD

GBPUSD weekly outlook

This pair looks more bearish biased and the 1.4470 88.6% fib level is a key level. I will probably look to buy it if momentum is not strong near it, but I will do that cautiously, moving my stop to breakeven at +20 and taking partial profits at +30 pips. If that level gets broken, I will look to go short at a retest for a possible profit of 100 pips or maybe more. A break of 1.4470 would probably mean a break of 1.3 on the EURO, as these two pairs tend to be correlated, so I will watch this pair carefully. Another key turning point is 1.5 and I will look to sell on the first touch if momentum is not strong and then look for a breakout of this level, that would confirm my Elliot Wave for EURUSD also. So if 1.5 gets broken, I will also look to buy at that level once it becomes support.

USDCAD

USDCAD weekly outlook

USDCAD has a very strong resistance at 1.3000 and a break of that would mean a big bearish move on EURUSD and GBPUSD. A lot of time has passed though between bounces off that resistance, so when price gets there I will look to go short for a nice profit. USDCAD seems to be range-bound, floating in the 1.15 – 1.3 area and a descending wedge formation seems to have formed on the H4 chart. That will definitely be something to watch out for and look for a break of those trendlines. A break to the downside would be bullish for the EURUSD/GBPUSD pairs and a break to the upside would mean bearish continuation for those pairs.

EURJPY

EURJPY weekly outlook

I am looking for a short at 122 – 122.35 area, but cautiously. That’s a nice resistance line at confluence with a 50% fib, so it looks like a strong one. A break above it would signal EURO bullishness and I would look to buy at a retest of 122-122.35 resistance become support. Target would be over 100 pips.

GBPJPY

GBPJPY weekly outlook

I made a nice 50 pips on this one thursday and anticipated some nice moves I wasn’t able to play because of exams. Next week, it’s possible to see a break of 132 on the downside, so I would look for a short on a retest. I would probably also buy at 129 for a fast scalp, then sell short at the retest of 129 after it becomes resistance. For the upside, 137-137.5 area is a key resistance, at confluence with a 38.2% fib trendline drawn from a daily chart and we also have a 61.8% fib resistance line just below, so I would first look to go short there if it goes up. Then if it lurks back up to it, I will wait patiently for a breakout and then buy at a retest of resistance become support.

This is my trade plan for next week and these are the major moves I’m ready to face. Good luck to you all!

S&P index is going up this morning and currently testing 885.15 resistance. Oil is also going to test 47.50 resistance. Asian and European equity markets rallied betting on the US automakers rescue.

I’m not pretty sure what will happen next and it’s hard to make a forecast at this moment, but I may be buying EURUSD at 1.3500 key resistance area and EURGBP at 0.9000. I’m pretty sure we will see parity on EUR and GBP, so 1.0000 soon.

I will probably also sell a breakout on USDJPY at the 90.50 support area.

I guess we’ll just wait and see what happens

Update: Oil just broke 47.50, M30 candle closed above and it’s using it as support. So we may see an EURUSD bull rally too. That encourages me to buy a breakout of 1.3500 and sell the USDJPY breakout of 90.50. S&P index is going down though, so I’m still not sure about what to expect.

USDCAD

I’ll be watching this pair like a hawk next week, as I believe we will witness a breakout of 1.3000 resistance level. Price has tested this level three times in the last 35 days. There have been 21 days between the first and the second test and 13 days between the second and the third test. If there is a retest this week, it will most probably be a breakout, so I will be watching the price action as it aproaches that level again.

My bet is that the price will bounce off 38.2% fib (1.2666) or 50% fib (1.2562) and then rally back up to 1.3000. So, while this happens, i will probably also buy at those key levels, with tight stops. I’ll keep you posted about it.

GBPUSD

I’m not sure I will be trading this pair soon, as it looks too dangerous for me. But, if you want an opinion, I think the bearish trend will continue and we’ll see the price going down to 1.4050, a 2002 low. That’s a very strong support line, so if we get there, I expect a big bounce back. Anyway, there are about 700 pips from where the price is now to that line, so I’m not sure that will happen too soon.

EURUSD

On EURUSD, I’m not sure what the next move will be.

But I would expect a break of 1.2562, the 76.4% fibonacci level. We had three recent tests on that support line: one test on November, 24th, the next one on December, 2nd (so a difference of about 7 trading days) and the last one on December 4th (a difference of 2 days between the last two tests), and this last one also made a small spike to 1.2548. So, the tests are becoming more frequent, and I would expect the next test to be a breakout of that level. If it will break that level, I expect the price to go down to at least 1.2470 or even 1.2330.

I don’t expect EURUSD to break 50% fibonacci level at 1.2815, but if it will, I will probably sell at 1.3000. Again, I’ll keep you posted next week about it.

USDJPY

This pair has been in a down-trend since August, 15th of this year. And although it’s close to some 1995 lows, I expect it to go down further. But on the short-term, I will look to sell this pair at key prices, like 94.60 (61.8% fib) or 95.75 (50% fib). I will only buy at 90 (psychological level).

GBPJPY

I am looking to sell this pair at 148 with a 100 pip stop loss (this pair moves like crazy). This is a dangerous trade, though, so I will watch the price action like a hawk and if I see clues that things might turn in the opposite direction, I will manually close the transaction. If the bearish trend will continue, I will probably buy at 129.5

I’ll keep you posted on how my plan goes, so stay tuned. Let’s hope we’ll make a lot of pips next week!