Wave Analysis:

During last week the GBP/USD pair was in a price range between the correctional levels of 11.4% and 23.6%, which are calculated in relation to an upside channel started from the low of August 2 (1.5490). At the same time the descending move which is developing from the high of September 21 looks like incomplete wave structure of the downward-pointing triangle. If it is so, after the building of the triangle has been finished which can be considered as a wave 4, the growth of quotes towards targets near the level of 66 figure may continue. It should be noted that the complexity of the wave structure in the range of two months’ flat (between June 20 and August 20) can be interpreted in various ways.

Targets for Wave 5 in c:

1.6314 and higher – 161.8% of Fibonacci

Targets for Down Wave after C is worked out or 4 in C:

1.6118 – 23.6% of Fibonacci
1.5998 – 38.2% of Fibonacci

Summary and Trading Recommendations:

The pound’s positions weakened last week. Now the descending move of the pair may continue in the terms of down wave 4 with 1.6118 and 1.5998 targets corresponding to 23.6% and 38.2% of Fibonacci. As the trend is very strong, we can observe an upward move towards 1.6314 and higher which is equal to 161.8% of Fibonacci in the terms of wave 5 in C. The fixation under the upward channel will indicate the completion of building of an upward trend and consequently formation of wave C. MACD has not formed any divergences. Wave 4 in C may be inside the upward channel.