FX.co ★ Wave analysis of the GBP/USD pair for October 22, 2013

Wave analysis:

During yesterday’s trading session the GBP/USD pair continued declining from the high of 1.6225. Meanwhile, the fifth wave that looks completed suggest that the currency pair may become more protruded and deeper downward correction as well as to form reverse of the trend at least in the medium term. At the same time considerable weakening of the US dollar leaves room for the complication of the inner wave structure of this fifth wave and the resume of the quotes growth in favour of the British currency in the short term.

Targets for down wave:

1.6067 – 23.6% of Fibonacci

1.5945 – 38.2% of Fibonacci

Targets for up wave:

1.6213 – 323.6% of Fibonacci

1.6288 – 423.6% of Fibonacci

Summary and trading recommendations:

The British pound has finished building of the first wave of the correctional trend channel (presumably). In terms of upward wave the pair continues rising with targets placed near calculated levels of 1.6213 and 1.6288, which is corresponding to 323.6% and 423.6% of Fibonacci. If the current wave is the second one in terms of downward trend channel, then from the current positions the drop of the quotes with targets placed near 1.6067 and 1.5945, which is corresponding to 23.6% and 38.2% of Fibonacci in terms of wave 3 of the downward trend channel, may start. The break of the high of October 1 suggests that the upward trend channel becomes more complicated and it will lead to the current wave structure may be revised.