GBPUSD: Imagine It's Early 2016
Brexit or not, cable headed for the cliff long before the historic vote
by Vadim Pokhlebkin
Updated: April 06, 2017
Imagine it's early 2016. Brexit hasn't yet happened. No one thinks it will.
The British pound is trading near 1.45. You put your best Elliott wave count on a monthly GBPUSD chart -- and see this incredibly bearish picture emerge:
(Chart and forecast as published by EWI's Currency Pro Service editor, Jim Martens, in our monthly Global Market Perspective on February 5, 2016; some labels added -- Ed.)
You call a buddy and tell him, "Elliott waves say cable will drop off the cliff -- to 1.16, from the current 1.45."
He says, "You're crazy. That would mean Brexit will happen in June, and everyone knows it won't."
You tell him, "Brexit doesn't matter. The waves say 'down hard' for cable, Brexit or not."
Your buddy says, "Good luck."
Four months go by. On June 24, 2016, Brexit gets the shocking "yes" vote -- and cable sees its largest single-day sell-off in history: down 1700 pips, into a 31-year low.
Your buddy calls. You don't pick up. You keep staring at your charts, as it's slowly sinking in...
...You've just nailed the biggest move of your forex trading career.
What's more, your Elliott wave analysis says the sell-off isn't done: That "1.16" target you saw back in February is still very much on the table.
(GBPUSD hit 1.19 in November 2016, although price data varied by forex data provider, with some quotes as low as 1.10. -- Ed.)
In 1992, young George Soros took a "crazy" bet on cable against the Bank of England -- and overnight, became one of the world's richest men.
He had guts. And the right tools.
We can't help you with the "guts" part. As for the "tools" -- yes.
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