I don’t usually trade Elliott Wave but this setup jumped off the chart and slapped me in the face while looking for reasons to go long GBPUSD -0.23% .
15th August saw the beginning of the 1st wave with a double bottom at post-Brexit lows.
To kick off leg 2, on Thursday 1st Septmeber UK PMI Manufacturing came out at 53.3, above the projected 49 and far exceeding July’s figure of 48.3 and that sent PigDog soaring by 135pips in 1 hour.
Friday 2nd September saw a big USD miss when NFP were worse than expected, giving Cable another ~90pip boost.
Monday 5th September saw more good news for GBP with new car registrations up 3.3% and further PMI data exceeding expectations, whilst on Tuesday 6th more bad news out of the US saw the USD weaken.
Mixed UK data on Wednesday has seen the GBP fall against the dollar, retracing back down to 50% of wave 3 in a 5-count correction (wave 2 was a 3-count, therefore you would expect wave 4 to be 5-count) and back into previous structure resistance.
I will now be waiting for price to head up and will enter upon seeing a 21/55 EMA cross to the upside to confirm that the market is turning bullish , and a 5/8 EMA/SMA cross to the upside to confirm that price is now following the trend. Stochastic and MACD oscillators will also be used on multiple timeframes to confirm my entry point.
Stops will be 50 pips or just below the 4/E swing low, whichever is tighter, and my conservative target will be 220pips north at the Monthly M4 pivot point.