Analysis of EUR/GBP on 4H Time Frame
Key Terminology & Concepts
Wyckoff Method: A technical analysis method that breaks down market behavior into phases of accumulation, distribution, and the price cycles within them. In this case, the focus is on accumulation and last point of support (LPS).
Elliott Wave Theory: A concept used to identify market cycles in the form of five waves in impulse movements (labeled 1-5) and three waves in corrections (labeled A-B-C).
Point of Control (POC): Refers to the price level where the highest trading volume occurs, often indicating key resistance or support zones.
Fibonacci Retracement: A technical tool used to predict possible reversal levels by using common Fibonacci ratios like 23.6%, 38.2%, 50%, 61.8%, and 78.6%.
LPS (Last Point of Support): This is the point at which the final price test occurs before the beginning of a major uptrend, in the Wyckoff accumulation phase.
Analysis Breakdown
Wyckoff Accumulation Structure
The chart suggests that EUR/GBP is in a Wyckoff Accumulation Phase, signaling the end of a downtrend and preparation for a potential reversal:
SC (Selling Climax): This marks the point where the most aggressive selling occurred, leading to a sharp decline.
AR (Automatic Rally): Following the selling climax, there was a strong upward reaction, showing the first sign of buyers returning.
ST (Secondary Test): Price revisited lower levels but formed higher lows, indicating accumulation of positions.
In this phase, the price is expected to test key support lines labeled as SC accumulation (4H) and SC accumulation (1D), which represent areas of strong buyer activity.
Elliott Wave Count
The Elliott Wave count within the chart is suggestive of an upcoming impulse wave following a complete corrective structure:
The price is currently in Wave A of the larger A-B-C corrective pattern.
Following Wave A, a Wave B correction is expected to occur, moving upward towards key Fibonacci levels and resistance zones.
Wave C will follow as a final upward movement before a larger reversal.
Key Levels & Fibonacci Retracement
Several Fibonacci levels are identified in the chart, crucial for determining potential reversal points and entry/exit strategies:
0.618 Fibonacci level (0.8504): This level acts as a key resistance point, expected to be tested during the Wave B correction. This zone aligns with previous resistance lines from earlier AR Accumulation.
0.786 Fibonacci retracement (0.85596): This is the higher level of resistance and the mitigated order flow zone where the price might face strong selling pressure, marking the end of the upward correction.
Phases of Accumulation & Distribution
The Wyckoff Phases B, C, and D indicate how the market transitions from accumulation to markup:
Phase B: In this phase, the market tests both support and resistance levels to absorb supply, causing volatility but forming higher lows.
Phase C: Here, the price moves into a spring phase, testing lower levels one last time before the uptrend. This is where the LPS (Last Point of Support) appears as a significant entry point.
Phase D: The price begins to markup, breaking resistance levels and confirming the bullish trend.
Price Expectations for the Next 2 Weeks
The EUR/GBP pair is expected to exhibit the following behavior over the next two weeks:
Bullish Impulse in Short Term (Wave B)
Resistance Level (0.8504): The price is likely to rally toward the 0.618 Fibonacci retracement level, where the B wave is expected to complete. This movement is part of the corrective pattern after the completion of Wave A.
POC (Point of Control): The POC at 0.85716 acts as a strong resistance zone where price consolidation or reversals may occur, further enhancing the likelihood of price stalling at these levels.
Wave C Development
After hitting the resistance at 0.8504, Wave C will likely initiate a downward movement back toward the LPS area, potentially testing key support levels around 0.8320 or lower.
Invalidation Level
The invalid level marked at 0.82824 suggests that if prices fall below this point, the current wave count would be voided, signaling further downside potential. This level is critical for traders setting their stop-loss points.
Long-Term Accumulation Support
The SC accumulation lines (4H and 1D time frames) around 0.8320 to 0.8280 represent strong support areas. As per the Wyckoff accumulation pattern, these zones should prevent further downside and initiate upward momentum in later phases.
Conclusion
The EUR/GBP currency pair on the 4-hour time frame is currently in an accumulation phase, with a likely upward correction toward the 0.618 Fibonacci retracement level (0.8504) in the next two weeks. Following this correction, the price may experience some consolidation or retracement near the mitigated order flow zone, forming Wave C. The point of control (POC) around 0.85716 acts as a key resistance, while support levels near 0.8320 should provide strong support in the case of any further downside.
In summary, the next two weeks suggest short-term bullish momentum towards 0.8504, followed by potential resistance and consolidation around key Fibonacci and Wyckoff levels.
Wyckoff Method: A technical analysis method that breaks down market behavior into phases of accumulation, distribution, and the price cycles within them. In this case, the focus is on accumulation and last point of support (LPS).
Elliott Wave Theory: A concept used to identify market cycles in the form of five waves in impulse movements (labeled 1-5) and three waves in corrections (labeled A-B-C).
Point of Control (POC): Refers to the price level where the highest trading volume occurs, often indicating key resistance or support zones.
Fibonacci Retracement: A technical tool used to predict possible reversal levels by using common Fibonacci ratios like 23.6%, 38.2%, 50%, 61.8%, and 78.6%.
LPS (Last Point of Support): This is the point at which the final price test occurs before the beginning of a major uptrend, in the Wyckoff accumulation phase.
Analysis Breakdown
Wyckoff Accumulation Structure
The chart suggests that EUR/GBP is in a Wyckoff Accumulation Phase, signaling the end of a downtrend and preparation for a potential reversal:
SC (Selling Climax): This marks the point where the most aggressive selling occurred, leading to a sharp decline.
AR (Automatic Rally): Following the selling climax, there was a strong upward reaction, showing the first sign of buyers returning.
ST (Secondary Test): Price revisited lower levels but formed higher lows, indicating accumulation of positions.
In this phase, the price is expected to test key support lines labeled as SC accumulation (4H) and SC accumulation (1D), which represent areas of strong buyer activity.
Elliott Wave Count
The Elliott Wave count within the chart is suggestive of an upcoming impulse wave following a complete corrective structure:
The price is currently in Wave A of the larger A-B-C corrective pattern.
Following Wave A, a Wave B correction is expected to occur, moving upward towards key Fibonacci levels and resistance zones.
Wave C will follow as a final upward movement before a larger reversal.
Key Levels & Fibonacci Retracement
Several Fibonacci levels are identified in the chart, crucial for determining potential reversal points and entry/exit strategies:
0.618 Fibonacci level (0.8504): This level acts as a key resistance point, expected to be tested during the Wave B correction. This zone aligns with previous resistance lines from earlier AR Accumulation.
0.786 Fibonacci retracement (0.85596): This is the higher level of resistance and the mitigated order flow zone where the price might face strong selling pressure, marking the end of the upward correction.
Phases of Accumulation & Distribution
The Wyckoff Phases B, C, and D indicate how the market transitions from accumulation to markup:
Phase B: In this phase, the market tests both support and resistance levels to absorb supply, causing volatility but forming higher lows.
Phase C: Here, the price moves into a spring phase, testing lower levels one last time before the uptrend. This is where the LPS (Last Point of Support) appears as a significant entry point.
Phase D: The price begins to markup, breaking resistance levels and confirming the bullish trend.
Price Expectations for the Next 2 Weeks
The EUR/GBP pair is expected to exhibit the following behavior over the next two weeks:
Bullish Impulse in Short Term (Wave B)
Resistance Level (0.8504): The price is likely to rally toward the 0.618 Fibonacci retracement level, where the B wave is expected to complete. This movement is part of the corrective pattern after the completion of Wave A.
POC (Point of Control): The POC at 0.85716 acts as a strong resistance zone where price consolidation or reversals may occur, further enhancing the likelihood of price stalling at these levels.
Wave C Development
After hitting the resistance at 0.8504, Wave C will likely initiate a downward movement back toward the LPS area, potentially testing key support levels around 0.8320 or lower.
Invalidation Level
The invalid level marked at 0.82824 suggests that if prices fall below this point, the current wave count would be voided, signaling further downside potential. This level is critical for traders setting their stop-loss points.
Long-Term Accumulation Support
The SC accumulation lines (4H and 1D time frames) around 0.8320 to 0.8280 represent strong support areas. As per the Wyckoff accumulation pattern, these zones should prevent further downside and initiate upward momentum in later phases.
Conclusion
The EUR/GBP currency pair on the 4-hour time frame is currently in an accumulation phase, with a likely upward correction toward the 0.618 Fibonacci retracement level (0.8504) in the next two weeks. Following this correction, the price may experience some consolidation or retracement near the mitigated order flow zone, forming Wave C. The point of control (POC) around 0.85716 acts as a key resistance, while support levels near 0.8320 should provide strong support in the case of any further downside.
In summary, the next two weeks suggest short-term bullish momentum towards 0.8504, followed by potential resistance and consolidation around key Fibonacci and Wyckoff levels.
Catatan
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