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Pound is one of the weakest in this week, down almost 300 pips from Friday highs, currently trades around 1.5600-1.5680 range.

Guest post by Gregor Horvat

We at anticipated that move, on some basics of technical analysis “how broken support becomes resistance”.

Here is the chart and comments that we shared with our subscribers on Thursday, Nov 17th 2011 past week

  • Cable broke through the 1.5860/90 support region which could be start of something bigger to the downside, especially if we consider that prices slipped below the support line of a trading channel as well. But notice that even if we still count move from the top in a corrective way, such as double zig-zag, we still need one leg lower (wave (C)) after wave (B) bounce, which may occur in the coming session or two. Alternate count also signals for weakness after corrective retrace into 1.5860/90 area which will now tend to react as a resistance either in wave (2) or (B) wave! “Support becomes resistance; Resistance becomes support”. Bottom line: Weakness to come after any pull-back higher, while pair trades below 1.6090!

GBP/USD Elliott Wave Technical Analysis November 22 2011

And here is now the updated chart:

GBP/USD Elliott Wave November 22 2011

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