GBPCAD is at the brink of completing a contracting triangle pattern on the hourly chart. If there is a breakout, a good bullish opportunity will surface. With the following GBPCAD Elliott wave trade setup, we discuss the wave analysis and the emerging pattern. We also discuss levels to target if this plays out well.
13 February, AtoZ Markets - The Elliott wave theory, aside its forecasting ability, can also help to pick high probability trading opportunities. These opportunities are found in patterns that exist in price charts. These patterns are repetitive and often result in good movements. One of these patterns is the triangle. Elliott wave discovered that the triangle pattern is often seen in the 4th wave of an impulse or the B wave of a correction like zigzag patterns. It can also be found in complex corrections. The triangle has 3 kinds according to the wave theory. One of them is the contacting triangle.
A contracting triangle is illustrated above in an impulse wave and as part of a corrective pattern. With the GBPCAD Elliott wave trade setup, we want to check if this pattern is emerging in GBPCAD.
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GBPCAD Elliott wave trade setup: weekly and daily views
The chart below shows the weekly Elliott wave analysis of GBPCAD.
The chart above shows the Elliott wave view of GBPCAD since 2009. Price made a 5 years peak before falling very fast. The fall is a clear impulse wave which can still move further down. The long term bias is therefore bearish. A dip to 1.4 is very likely.
The daily wave count above shows price in a corrective wave 4. The pattern could be a double zigzag. In the medium term, GBPCAD may rally to 1.73-1.74 before the dip continues. So, where is the contracting triangle pattern?
GBPCAD Elliott wave trade setup: swing triangle pattern?
The contracting triangle forming below is typical of the one discussed by the Elliott wave theory. Just like we have in the analytical drawings above.
A breakout will be necessary for a bullish confirmation. Price targets are 1.676, 1.71 and 1.76. This pattern will be invalid if price breaks below 1.6240.
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