Wave analysis:
As it was expected, during the yesterday’s trading session the GBP/USD pair started reversing from the reached on Friday lows and during the second half of the day adding more than 80 basis points tested the level of figure 61. Thus, the Friday’s low may be regarded as completion of the first wave, or a, in terms of future more extended downward correction. If this assumption is correct then after completion of forming the second wave, or b, the currency pair will continue decline towards the level of 1.5850.
Targets for new down wave:
1.5945 – 38.2% of Fibonacci
1.5846 – 50.0% of Fibonacci
Targets for up wave (probably 2 or b):
1.6142 – 200.0% of Fibonacci
1.6169 – 11.4% of Fibonacci
Summary and trading recommendations:
The British pound has finished building of upward trend channel. The decline of the quotes may continue with targets placed near 1.5945 and 1.5846, which is corresponding to 38.2% and 50.0% of Fibonacci in terms of wave 3 or from the correctional downward trend channel. In terms of the upward wave, probably 2 or b, the currency pair continues rising with targets placed near 1.6142 and 1.6169, which is corresponding to 200.0% and 11.4% of Fibonacci. Unsuccessful attempt to break one of these levels suggests that the pair is ready to build wave 3 or c.
