Just about 5 weeks ago, while discusing the GBP/USD outlook, I pointed out that a leading bank was calling a head-and-shoulders top in the Pound, and they had gone short at 1.6133 with a stop at 1.6305. From an Elliott Wave Principle point of view, it did not seem right. By the evening of 23rd June, I was kicking myself for having stuck my own neck out on this matter, because clealy the GBP/USD has broken its neckline and going down rapidly. By 12th July, it had reached a low of 1.5780. Well, in the long run, everyone is right. But many of us also die! The GBP has come roaring back, vindicating the view that what finished there was not a head-and-shoulders formation, but some other beast. Who cares now, anyway. SOme of us have lost money on other trades in the meanwhile, right? However, there is a lesson for you here. Far too often, analysts tend to label a formation as a head and shoulders top, and how nice it would be if they applied some Elliott Wave brush on that picture.. maybe a different image will show up!
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GBP/USD outlook: In the long run, we are dead
By Ramki4 Comments1 Min Read
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Not surprising at all , these type of H&S formations(sloping upwards) rarely succeed.They are considered to be less bearish. Dangerous are the ones sloping downwards.Now it surely will take out the earlier high or at least that is what is supposed to happen in a H&S “Failure” .
Relying on head and shoulder pattern seems to be quite a favourite of many chartists. But wouldn’t it be better to stick to wave counts no matter what. From the completed chart we are able to predict a false head and shoulder pattern. But as a trader who uses only wave theory, the clear five wave up move from 1.595 to 1.675 should have been good enough to go short. And after seeing a retracement by nearly 61.8% (wave B) he would have gone short again till the neck line. This way he would have been disciplined and used stop loss as well at appropriate junctures.
So Ramki, what is your wave outlook on the current GBP move? Can you please give the viewers the insight of monthly, weekly and current wave count; if you can spare sometime.
thanks and regards
thank you for the update, but what is the new count now?