Elliott Wave Analysis of the GBP/USD Currency Pair by Sid from ElliottWavePredictions.com. Click on the chart twice to enlarge.
Before chasing today’s huge move in equities to the upside, one might want to consider the pattern in the British Pound. The triangle that started in January 2009 has managed to last almost 48 full months now, but is still clearly discernible on the weekly chart. The movement up from the black wave D low in January 2012 is choppy, overlapping, and clearly corrective. The pair has already plummeted 115 pips from today’s high, creating a huge bearish pin-candle. Today could easily mark the end (finally) of the triangle, and the expected terminal thrust to the downside is a whopping 3691 pips, based on Elliott’s triangle measuring technique. This would equate to prodigious US Dollar strength (when compared to other major currencies) for most of 2013 . . . not exactly a bullish sign for US equities.
P.S. A note to all EWP ScreenShots enrollees this week: Due to the markets being closed yesterday, I will be posting this week’s mid-week ScreenShots tomorrow (Thursday).