The forex chart of sterling against the dollar makes it clear that on the medium-term, there is somewhat more downside on the way for sterling. Since the high of 2.1160 last year, the British Pound has seen a literally precipitous collapse against the US dollar that shows no immediate sign of halting.

The forex chart below shows a monthly bar chart all the way back to the lows in 2001, along with Fibonacci retracement levels. As is clear, the market has penetrated even the 76.4% Fibonacci level on a monthly close basis. In general, when this happens, the market will virtually always make the entire 100% retracement. In this case, it means that the British Pound is looking for a target of at least 1.3680.

In addition, if we perform a longer term Elliott Wave analysis, commencing from the high of 2008, we see a clear 5-wave sequence in progress with the fifth wave still to come, again making it highly likely that the specified target of 1.3680 will definitely be reached, if not actually exceeded…

We are seeing a cluster of alternative wavecounts being projected out on the right-hand side and they all give bearish targets.

Finally, if we look at Gann angles, we can see one technical reason for the temporary sideways movement that has halted the seemingly unstoppable collapse….

In the area from the highs to the recent lows, it is clear that the Gann angles are spaced very far apart, giving the market plenty of room to fall without support. Nevertheless, we see that is WAS supported briefly on the 1X1 Gann angle before finally breaking through. Thereafter, further collapse ensued before finally coming to what seems to be a temporary resting place between the 1X3 and 1X4 angles. Clearly, even from this perspective, the market remains weak and a revisit of the low from which the Gann angles originates seems extremely likely.

Asoka Selvarajah, OnlineTradingRebel.Com