The GBP/USD rallied in a clear 3 waves from the 1.5850 low. I originally labeled this rally as a 4th wave, but it's become quite long and extended in both price and time to have EWP's "right look". It hasn't violated any EWP rules so it's still possible, but I want to explore other possibilities as well. It's possible that the decline is a series of waves 1 and 2, I have them labeled as 1-2 and (1)-(2). This would be extremely bearish for the pair and lead to a strong unrelenting decline for several days at least.
With the clear 3 wave rally from 1.5850, and sharp reversal this morning, I feel comfortable lowering my stop again to lock in more profits. I lowered my stop from 1.6115 to 1.6075. If that level is broken, then most likely a larger correction is underway and I want out of the position anyway. By lowering my stop another 40 pips, it will lock in a total of 160 pips of profit at this time since my entry point as 1.6235.
The same holds true for the AUD/USD trade if anyone got on it as it rallied to the .8900 level I mentioned yesterday. A stop above the .8926 high would be in order in my opinion. I'm only going to continue to track the GBP/USD trade though, unless there's demand to track the AUD/USD trade all the way through as well.
As for the stock market, the rally is faultering a bit this morning, but so far it looks corrective. The next wave down would be a wave (iii), and it should be unmistakable when it gets underway. So a steady and slow grind lower does not get my attention to calling a top just yet. I'm still looking at the S&P 1116 area for good resistance and a chance to add to my short positions.
More on the stock market later as the price action unfolds.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.
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