[MT_E and I] GBP/USD and EUR/USD 8/7/08, there is a parallel relationship

[Loren Morlan]

Weekly EUR and daily Cable charts are attached.  There is a well known parallel relationship between these pairs.  Review of appropriate periods with each pair may provide insight as to future price action.

 

The first period and pair considered is the weekly Cable which traces an objective Bearish Gartley.  This pattern is predictive from D high to the subsequent low which usually is between Fibonacci 61.8 to 78.6 of C to D.  Current retracement is Fib. 1.00, but still a valid Bearish Gartley.  Once this pattern completes price is expected to move higher and thus becomes bullish.  Fibonacci expansion values are along the right chart edge and offer areas of resistance to higher price.

 

This pattern has developed since high at point X on 3/9/08.  The length of the pattern suggests it is more likely to complete as predicted.  However this pattern like all other patterns may fail.  Presently it is unclear whether this longer term pattern will fulfill its prediction of higher price.

 

Daily EUR traces a Pesavento Bullish Crab which predicts higher price in this period.  Since this chart was copied price has retraced 1.732 of X to D, the next lower support level is 1.786.  This bullish pattern is still valid and suggests higher price for the EUR and also higher price for the Cable by virtue of their parallel relationship.

 

Comments:

 

The weekly Cable is at a point where higher prices may occur if its longer term Gartley pattern completes as predicted.  The daily EUR traces a bullish pattern which suggests higher price. 

 

The two different patterns in each pair are consistent with respect to future price action in both pairs.  However, both patterns may fail. 

 

There are no blue HA candles traced in either period and M and A indicators are all below their respective zero lines.

 

Loren

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