British Pound 1985-2019 Review

 

If we look back to 1985 there should be no doubt that we can see that the British Pound had a huge single spike to the downside. 1985 was an important year for many of the currencies to make major turnings. All the currencies inside the USD index act inversely, so our wave counts have to do the same thing.  Thinking upside down with the wave principle has to be pretty normal if we want a decent wave count.  The last thing I have is a decent GBP wave count.  What I want and what the market is going to give me are two different things. If the GBP gets close to the 1985 bottom will it be at a Cycle degree wave 5 bottom?  I have my doubts at this time as the 2009 bottom may be the “A” wave in Primary degree location as well.

If a new low is going to happen then a plunging zigzag could be in progress. Below the commercials have been switching to the bullish side, while the speculators have done the opposite. Speculators are believing the bearish fundamental news, as they think this bearish trend is going to continue.

All fundamentals come in the form of “news” as the government shutdown clearly demonstrated to me.

 

These visual COT reports give us an idea as shorts and longs are clearly visible. The red lines are the long positions so I would be hesitant to take any position in the short term. Brexit remains the problem and until that gets resolved the GBP could be stuck in no man’s land for a little while longer.

Last week I still received one more Market Vane sentiment report that ranged between 34%-40% bulls, which are not some readings I can jump up and down about. Now if there were only 14% bulls in the survey, then that would be a different story.  I refuse to give any long drawn out fundamental commentary as 1000’s of other analysts are paid full time to do that. Every time the GBP makes a move analysts will jump in and find you a reason why it moved.

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British Pound Crash Update!

All this looks very bearish as the British Pound futures imploded this morning again. Sure the GBP can still crash and if this is just a bear market rally, then the 2017 bottom will never hold. The commercials do not support the public bearish view as they have very large long positions open with the GBP.

It would be something if the pattern is a 1-2, 1-2, 1-2 wave count. This wave pattern can produce an impulse move that is pretty rare and one more small 1-2 wave structure should appear. 3 sets of 1-2 wave counts after the wave 2 in Intermediate, is about the maximum that we can see, as they will be pretty small after Minuette degree. Either way betting against the commercial hedgers is a futile activity, as it would only give out short-term gains at best.

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British Pound Weekly Chart Bullish Update

 

When markets go down, bearish fundamental stories come out. I look at it from a contrary perspective and when I read bearish stories on the British Pound, I quickly flip to the COT reports to see if the COT report supports any of the bearish rhetoric. Take a quick look below and as the commercial traders see a rosy picture, while the speculators follow the crowd and believe the bearish BS!  In early 2017 the British Pound hit a major bottom and has since been holding. It sure looks like a wave 2 correction has completed, with the next wave 1-2 also completed.

This is also where I use the 1-2 wave count and since I’m at an Intermediate degree bottom, I can only have 2 lower degree extensions. It might be a bit early for Minor degree wave 1-2 to be completed, but that can be easily adjusted.  I’m sure some diagonal wave structures will be thrown in to keep us guessing, but when this bullish phase does something different, it will force a review each and every time.

 

This is the simple British Pind COT report where  the commercials sure are looking bullish to me. Those are net long positions, while the speculators are bearish. Speculators are chasing the perceived trend and always get into a trap. Look into the past and we can see major shifts in positions and I would not look for a bearish wave count until the commercials start to turn net short again, or at least close to it. Are the COT reports classified as “Fundamentals”?  With the EWP, all sentiment readings are important as they make charts go up and down.

The mainstream media always quote the speculators like they are the experts, but the commercial hedgers are a different group, as they deal more with people closest to the industry.

To help confirm this bullish trend, then higher highs, and higher lows must form.

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British Pound Daily Chart Bull Market Update

 

The COT report you see above is for the British Pound which shows that the commercials or hedgers have a massive long position, and then on the flip side, the bottom shows all the managed money positions or large speculators with a bearish opinion. Two massive opposing views in which way the market is going to go. I watch COT reports for over 18 years and I know that it is the hedge fund money speculators that “always”get into a trap of one type or another.   Any wave analysts that is still bearish on the BP will have the wave positions trashed all the time.

It is futile to count bearish wave counts when the numbers are so skewed against the GBP bears.

 

This daily chart I added 100 bars,  keeps the Primary degree “B” wave bottom in view.  What follows the “B” wave bottom should be 5 waves up in Intermediate degree. 1985 was a pivotal year for many currencies that made a wave 4 bottom in Cycle degree.  A short description would be, “it’s a bull market”!

Elliott Wave is much easier to figure out from the idealized vision, and I ask the same group of questions before every turning. Where am I, and what do I need to fill the entire “C” wave in Primary degree? In this case, 5 waves up in Intermediate degree is the only idealized pattern. When a pattern does not happen, then it should always force a complete review.

When was the last time that a wave analyst has shown you a complete Cycle degree update, with the 1985 bottom visible? 1985 ended in massive moves making those spikes stand out like a sore thumb. If I see 1985 ignored then those analysts have no clue where they are. Anyone can flip numbers and letters around inside a computer, but get them to count it out on a big monthly chart with pen and paper, they will not be able to do it.

The correcting phase may still be in effect so wave 2 would still have to be adjusted in the future.

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British Pound Weekly Chart Death Cross Review

So far the British Pound Death Cross has already happened across all three important time frames.(daily, weekly, monthly ) Some of my indicators are already turning bullish but I want to see 80% of my indicators turn bullish, not just 20% or so.

We can see that the commercials are long the GBP already by a substantial amount. The speculators are betting the opposite way and if they keep on turning bearish then they will be in a big bear trap. Commercials traders do not assume the same type of risk the speculators do as they work closer to the business than any speculators ever will.

If only 20% of my indicators are present then this is not nearly enough to cause a major reversal at this time.  New record lows in the GBP should still happen but, after that all bearish bets would have to be off the table.

Every Tuesday I get the Market Vane report and it had a low of only 33% bulls present. This is also decent, but it could sink to below 10 yet. The GBP is inside the US dollar basket so it’s not going to fly while the US dollar is still bullish. I’ve seen these setups before and extremes can become more extreme, before they reverse and soar the other way. We have 5 months left this year and these indicators should stiffen up as the months go by.

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GBP Monthly Chart: 1979-2018 Elliott Wave Triangle Update

In some of my past updates I didn’t go back far enough to see the big picture, but with this monthly chart and an additional 1000 bars, we can go back to  1979 and start another count. I have a very high degree of confidence that the GBP is in one big Elliott Wave triangle, and if I keep the wave count as I had it, we may be too early for the 4th wave in Cycle degree to be completed. From my Cycle degree perspective all my work is based on 3 degree levels.

Primary degree, Intermediate degree and Minor degree, in sequential order  is what I have to find to make a better fit. Constantly looking for a better fit is the only way to eliminate the bad wave counts, which “every” wave analyst constantly has. This wave count position change also does not impact  the wave count I presently have posted,  as the short term target is still the same.  Wave 3 in Minor degree still needs to get completely retraced, but does not have to fall below the 1985 lows.  That 1979-1985 crash is just one single zigzag, followed by another completed inverted zigzag. This only gives us a count of two zigzags that have completed. This means we still have 3 Primary zigzags to go which still could be many years away.  Sorry folks, but I have no SC or GSC degree wave counts that I can give you.  I could give you nothing but SC and GSC degree bullshit if you want, as I spent a decade or more counting everything in GSC and SC degree levels.

Flipping big numbers and letters around is actually time traveling on paper, as one degree is the same as jumping forward or backward in time by 60% or more. This is a structural change and not a “cosmetic” change. Cosmetic wave counts never last and they always make us miss major bear and bull markets.

The commercials are net long by a small amount, but they carry far less risk. The speculators carry all the risk, who have”shifted” to the  to the long side. The mass media always report what the speculators are doing. Speculators are the trend chasers which always leads them into a trap sooner or later.  I have been using the COT reports for close to 20 years, which always work best when we see extreme differences between the two groups. If net positions get close to a 4 or 5:1 ratio, then I consider this as a substantial extreme. It also puts our wave counts, at risk of being wiped out.

I will be posting more GBP charts, but mostly from daily or weekly charts and Minor degree turnings.  I think this picture above will show much better as we head into the fall time period. Those that think that the British Pound is going to soar are in a bull trap, so they eventually will have to pull the ejection seat and bail out.

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British Pound Bearish Phase Review

With my last posting I did not go back far enough, but once I did a big triangle started to make a better fit. It’s always about finding a better fitting wave pattern with my wave counts, as it makes no sense to replace any wave count that is as crappy as the last one. Anybody can come up with a wave count, but maintaining that wave count is the big task. So far the GBP is still on a bearish decline which should take it to new record lows.

Any new record low, even by the slimmest of margins will help to confirm that this wave count is valid. Of course it could be very choppy on the way down, but we should get 5 waves in Minute degree which should finish this Cycle degree GBP bear market.

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GBP, British Pound 1980-2018 Cycle Degree Review

I have a large following from Britain, so this wave count is just for you. With it comes a warning, as I had little time to really work on the big picture. 1980 is as far back as I could go. I had to manipulate this June contract to keep that 1980 peak in view. It takes a very long time to build a good wave count as you have to go over it hundreds of times before you might see a pattern that is recognizable. Then you have to count it all out to try and confirm what you think you are seeing.

Wave counting is a secondary act, as we have to see the pattern first, before you can count it.  If this wave count doesn’t work, but the Pound keeps soaring much higher then this wave count must be trashed and the entire thing has to be counted again.

One wrong move in Minor degree is enough to instantly start a review going back as far as we have to. In this case the 1980 peak could be the location for a Cycle degree wave 3 top and what followed was an implosion where you can only see very small wave patterns. We are looking at a potential zigzag bear market in a Cycle degree 4th wave correction, that is still far away from completing. Mind you the speed at which the Pound has crashed in the past, sure can speed up the final move. The British Pound also made a strong peak in 2008, but that only matches up a Primary Degree “B” wave top. The little move in Minute degree can be removed as it can be part of the diagonal bullish cycle leading up to it.

Between 1992 and the 2008 peak we had another huge H&S which end up being a very bearish H&S. Since the 1985 bottom the Pound would be in the mother of all Head and Shoulder patterns that would be extremely bullish, even if the Pound crashes below that 1985 bottom again.

A big zigzag crash can have a very steep “A5” wave, but then the declining “C5” wave turns into a wild 5 wave run including a triangle in the 4th wave position. In flats this is usually reversed where the “C5” wave crashes dramatically.

The commercials are short the British Pound so that just adds to the bearish outlook. There are many asset classes with this type of a 4th wave, so something rather big is going to happen during the rest of this year, which will force a major reversal onto all the investors that are leveraged in the wrong direction.

So far I have a rough list of about 16 asset classes that can have Cycle degree peaks already completed or still in progress.

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