GBP has been relatively very weak since the start of this year and almost looks like it is in free fall. There are many analyst and commentators are pointing to GBPUSD which appears to have formed a symmetrical triangle with suggestion that it is "doomed". They many well be right. However, whilst accepting that it is at critical level, I am reluctant to agree with them. I note that It has tended to almost move in the same direction (see chart below) as Dollar Index since 3rd January. It does not sound logical that the pair which has inverse relation ship to Dollar Index could continue for extended period following Dollar Index lower. By now you will know my longer term view on the Dollar Index and can check it out at
. Unless UK is in worst position than many of its neighbours. There for normal inverse relation ship to the Dollar Index is likely to be restored sooner rather than later. My reasons for this is as follows:- (1) that the modified pitchfork applies has been use full in picking up important reaction points highlighted and is again approaching the rising lower parallel pitchfork line. (2) The move higher from June low appears being retraced in an expanded flat ABC correction where wave (b) goes beyond the origin of wave (a) and wave (c) goes beyond the origin of wave (b), and wave (a) & wave (b) on the chart appears to be zigzag and hence the wave (c) is in minor 5 wave decline (feature of Flat Correction in EW principle). (3) If this is the case then we re in the final move down which could end around 1.56 where several Fib confluence & lower parallel Pitchfork line meets and is accompanied with potential RSI divergence with price. (4) Friday's action against most GBP pairs is showing very big bearish candle after noticeable decline already, hence could be be capitulation action. I suspect next week two will provide further clarity. Either confirming my analysis and view noted above or in going BUST.
