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The British Pound will likely slide lower before the next leg of strength takes hold.

A solid low may be in place for the GBPCHF.  For months now, I’ve waited for the decline to stretch into 5 waves. Now that that has happened, it is time to expect a rally.  The count above shows the GBPCHF drop from 2.0929 as an ending diagonal.  These patterns are usually retraced (fully) rather quickly, so an initial bullish target is at 2.0928. 

I wrote a few weeks ago to “expect a return to at least the 38.2% of the drop from 2.3579, which is at 2.0407.”  The GBPCAD surged to 2.07, reaching that level yesterday.  The rally from 1.8653 is in 5 waves, so expect weakness down to 1.9817 support before the resumption of strength.    

The GBPAUD blew through the downward sloping channel that had contained price since 2001.  Weekly RSI is at 93…an unprecedented level.  A decline, if just corrective, is likely to correct the overbought nature illustrated on the chart above.  Support is at 2.4294. 

To repeat the longer term analysis that I have held for months; “A C wave is working higher from the low earlier this year.  This advance will most likely exceed 3.0702 within the next number of months.  2.5726 may be a wave ii of 2 low.  A bullish bias is warranted against there although price ideally remains above 2.6420.”  The GBPNZD has taken off as expected and it will probably be just a matter of weeks before 3.0702 is exceeded.  Near term, expect support near 2.7625.

Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published at 6 pm EST), Daily Technicals  every weekday morning (9 am EST), COT Analysis (published Monday mornings), and analysis of currency crosses throughout the week.  He is also the author of Sentiment in the Forex Market.