24 October 2016, GBP/USD
As anticipated, the cable traded short and even tested the lower trend line forming bottom of the wedge. As long as this trend line protects the lower side, we expect a possible bullish wave count towards the upper trend line or even higher. The anticipated upward rally is the completion of the current larger five wave cycle with the motive wave (E) ending along the upper trend line. This view can only be rendered futile in case the pair end up below the lower trend line, if the latter is the case, then we expect an acceleration to the lower side. Nonetheless, the daily chart below shows signs of a possible breakout below the lower trend line, if this is the case then, we'll remain short for the better parts of the week.
We hope to trade this pair alongside EUR/USD and EUR/AUD. These pairs have a strong positive correlation of up to +89% and will have a similar price action during this intraday.
Trade Recommendations:
Only go short upon a clear breakout below the lower trend line. However, as long as the lower trend line protects the lower side look for potential long positions with an ideal target at 1.2858.
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