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

Wave Analysis:

As it was expected, during the early Asian trading session the GBP/USD pair started a pullback from the Friday’s lows and by the end of the day it reached the level of 1.5770. Thus, it looks like as an inner wave structure of wave 4 becomes more complex and extended. We cannot exclude the possibility of the pair to start moving in a sideways channel between the levels of 59 and 57 figures.

Targets for new down wave (probably 5):

1.5674 and lower – the low of wave 3 or C

Targets for up wave, probably correctional pattern of the trend (c in 4):

1.5864 – 38.2% of Fibonacci
1.5922 – 50.0% of Fibonacci

Summary and trading recommendations:

The British currency has recovered after it had lost some positions. The ascending movement in terms of wave 4 of the correctional trend may continue (or wave 3 of a new uptrend) with targets placed near the levels of 1.5864 and 1.5922, which is corresponding to 38.2% and 50.0% of Fibonacci. If wave 4 has completed its building and down wave looks like 5-wave structure, then the descending movement continues with the targets placed lower the level of 1.5674, which is corresponding to the low of wave 3 or C and lower. The basic issue is whether downtrend is completed or it looks like a 5-wave structure. The pair has broken through the upper line of the bearish channel. Thus, the correctional pattern of the trend may be more complex.