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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. A

lternate count also signals for weakness after corrective retrace into 1.5860/90 area which will now tend to react as a resistance! “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 Analysis November 17 2011

Guest post by Gregor Horvat

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