Wave analysis:
It looks like that on Friday’s drop for 170 points to the level of figure 60, the GBP/USD pair confirmed completion of upward trend channel, starting from the low of August 28. If this assumption is correct, then possibly the currency pair has moved to the stage of formation of downward correction, which will develop towards the level of 1.5850. At the same time if the price reverses from the reached low, the resume of the upward movement and completion of inner wave structure of the fifth wave may be observed.
Targets for down wave:
1.5945 – 38.2% of Fibonacci
1.5846 – 50.0% of Fibonacci
Targets for up wave:
1.6067 – 23.6% of Fibonacci
1.6109 – 11.4% of Fibonacci
Summary and trading recommendations:
The British pound has finished building of uptrend. The decline of the quotes may continue with targets placed near 1.5945 and 1.5846, which is corresponding to 38.2% and 50.0% of Fibonacci in terms of correctional wave or a series of waves. In terms of upward wave, probably b, the currency pair may start rising with targets placed near 1.6067 and 1.6109, which is corresponding to 23.6% and 11.4% of Fibonacci. The break of its lower upward channel suggests that the pair is ready to build downward trend channel.
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