FX.co ★ Wave analysis of the GBP/USD pair for October 10, 2013

Wave analysis:

As it was expected, yesterday the GBP/USD pair started trading session with downward movement and lost no more than 200 basis points and reached the level of 1.5915. Thus, it looks like the currency pair has moved to the stage of forming wave 3, or c, in terms of downward corrective structure, starting developing from the highs of October 1-2. If this assumption is correct, then taking into account interrelation between the size of wave 1, or a, or wave 3, or c, we may assume that targets for that wave 3, or c placed near the level of 1.5845 or even 1.5745.

Targets for down wave (3 or c):

1.5945 – 38.2% of Fibonacci

1.5846 – 50.0% of Fibonacci

Targets for up wave:

1.6067 – 23.6% of Fibonacci

1.6169 – 11.4% of Fibonacci

Summary and trading recommendations:

The British pound has finished building of upward trend channel and continues building of a new downward one. The decline of the quotes continues 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 c of the corrective downward trend channel. In terms of new upward wave the pair may start rising with targets placed near calculated targets of 1.6067 and 1.6169, which is corresponding to 23.6% and 11.4% of Fibonacci. The bearish trend channel forming after October 2 may transform into 5-wave one.