FX.co ★ GBP/USD Wave Analysis for December 25, 2012

GBP/USD Elliott Wave
For the last few days the GBP/USD pair was moving downwards, impulsive wave 5 (colored blue) of the bigger wave (3) (colored green) was developing. Yesterday, during the Asian session we could observe ascending movement towards the 1.6205 level and we can consider this move as the end of the wave 4 (colored blue). Therefore, during the European and New York session this major pair did not manage to hold this level, and price dropped to the 1.6100 level. We can consider this move as the end of the wave 5 (colored blue) of the bigger wave (3). Tomorrow we are expecting to see price higher when development of the corrective wave (4) (colored green) starts. In accordance with our wave rules and taking into account that the wave 4 should retrace 38.2% of the wave 3, we can define the potential targets with measuring wave 3 with take profit at 1.6175 (38.2% of wave 3). To reduce the risk, we can use resistance at 1.6100 level as stop loss.

Support and Resistance
(S3) 1.5989 (S2) 1.6070 (S1) 1.6119 (PP) 1.6200 (R1) 1.6249 (R2) 1.6330 (R3) 1.6379

Trading Forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the upward movement. That is why long positions at level 1.6130 with stop loss 1.6175 and take profit at 1.6100 are recommended.