It has been almost a year since we published “GBPUSD, Not As Optimistic As It Seems”. 360 days ago, GBPUSD was trading close to the 1.70 mark, but the Elliott Wave Principle told us to expect a major top soon, followed by a big sell-off. The next chart illustrates how that forecast was looking in the middle of May 2014.
Two months later, in July 2014, GBP formed a top against the US dollar near 1.72 and started declining. A journey to the south, which led the pair to 1.4565 on April 13th, 2015. This 26-figure slump from 1.7190 to 1.4565 shows that the Wave Principle is, without a doubt, able to predict large long-term price movements. Furthermore, all you need is a chart. The count you saw on the above-shown chart was our primary one. It has been serving us exceptionally well so far. However, the sharp recovery that came after 1.4565 was touched and is still in progress made us think about other possible wave counts. One alternative, which looks quite probable, is shown below.
The primary count was based on the assumption that the (W)-(X)-(Y) pattern came to an end in the middle of 2014. The alternate one suggests we might still be in it, because all the price action after the top of wave (W) appears to be a running flat correction. It is the same as the expanding flat with the difference that wave C does not exceed the end of wave A. All of the necessary characteristics are met, so we could label it (X). If this count is correct, wave (Y) to the upside may have just begun. The primary count is still valid as well, but if the bulls continue to persist, we may have to start looking at GBPUSD from the perspective of the alternate outlook, where wave (Y) has the potential to take the exchange rate to 1.80 or higher. The smaller time-frames must be observed too.
