FX.co ★ GBP/USD analysis for February 5, 2013

GBP/USD Elliott Wave
Since our last analyses the GBP/USD pair was trading upward like we expected, corrective (4) wave (coloured green) of the bigger (5) wave (coloured red) was developing. Yesterday during the Asian and European sessions we could observe strong ascending movement from 1.5693 toward the 1.5771 level. Therefore, during the New York session the cable did not manage to hold this level and the price retraced back to 1.5728 level. At the moment the GBP/USD pair is trading around 1.5779 level and we expect to see the price under 1.5600 level soon. In accordance with our wave rules and taking into account that the wave 5 should retrace 100% of the wave 1, we can define the potential targets with measuring wave 1 with take profit at 1.5554 (100% of wave 1). To reduce the risk, we can use invalidation at 1.5807 level as stop loss.

Support and Resistance
(S3) 1.5655 (S2) 1.5687 (S1) 1.5707 (PP) 1.5740 (R1) 1.5772 (R2) 1.5792 (R3) 1.5825

Trading forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the downward movement. That is why short positions at level 1.5750 with stop loss 1.5807 and take profit at 1.5554 are recommended.