Cable’s break of the $1.40 handle is an attractive psychological level to consider short bets. Despite the 200% Fibonacci extension of pink (i)-(ii) supporting a similar narrative, pink (v) could be extended. In such a scenario, the possibility of breaking to fresh highs to 1.4150 will increase.

Pound Could Extend Higher in Wave (v)

The now established breakout somewhat validates the current medium-term structure seen since the 1.2676 low registered on Sep 23^rd, ’20. The 1.4162, a tad higher than the abovementioned high that can be expected to end this bullish run, is the 261.8% extension of blue W-X of the triple three in wave (Y).

Although the break towards the said highs could validate a bullish move outside the regression channel, it could be a false-break, where more sellers could unload a better size of pounds for a reversal at higher levels.

A close alternative count suggests that the cycle in wave IV ended, and a reversal will ensue without rising to fresh highs, giving early speculators a greater advantage.

Long-tern Alternative Count is More Bullish

However, looking at a third –and less likely- count from the $1.14 low registered on Mar 19^th, ’20, a continuation higher in the very short-term and long-term could be possible.

We are looking at an impulse in red (3) in the above count, either completed or likely to complete in the very short-term near 1.4064. There is also a chance that blue 5 extends to the 261.8% extension of the internal blue 1-2 in (3). Either way, once (3) is in, a correction in red (4) could be expected to drive rates lower.

The medium-term correction could take us to a fresh low around or below the 50% of red (3). This is extracted by the depth of red (1)-(2). The Fibonacci can be drawn once (3) is finally in and we have a new high with sellers potentially driving the pound back towards the 30s.

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