As visible above prices did indeed reverse and it looks like we are heading lower, there are a few things to note about the chart above. One is that if this is going to be a third wave down it needs to adhere to the personality one would expect of a third wave, which simply means that prices need to decline very soon in a steep manner, If they don't then that would question the validity of such a count and would make me search for alternatives. I dont think however that this labelling will need to be changed substantially. Another point to note is the MACD hook signal that might be occuring (MACD hook is when the signal line briefly penetrates/attempts to penetrate the MACD line(red) and is followed by a quick reversal. An illustration of this signal is present above which occured very close to the 2012 peak. Another point to note is the high formed on Apr 3rd would most likely hold due to the tendecy of the market to remember its firsts as explained on one of the previous posts on the GBP/USD currency pair. Alot of evidence complements this wave count.
Notice above that we are potentially forming one of the most common bar/candle patterns traders look for, which is a "Key reversal day" pattern. A breaish key reversal day is when the current candle makes a new high relative to the previous candle yet manages to close bellow the previous candle's close. This pattern has even more bearish implications if it turns into an outside candle (higher high than previous candle and lower lowe than previous candle) and also if it manages to close less than 40% of the candle's range measured from the low of the day.
Regards,
Ahmed Farghaly
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