09 March 2016, GBP/USD
GBP/USD is currently trading with a slight bearish bias. Unfortunately, our short-term support 1.42119 was broken and the price is currently rallying below it. We expect the price to rebound from the lower supportive trend line to mark the end of the black wave (4) and to signal the unfolding of wave (5) with an ultimate target at 1.4395. A break below lower supportive trend line will push wave (4) lower to 1.4065 from where we will be looking to go long upon a clear rebound. Pound should be traded alongside, EUR/JPY and GBP/JPY. These pair have a strong positive correlation of up to +0.83 and are thus expected to have a similar price action. Although we anticipate these pairs trade in the lower ranges during this intraday, we will wait for GBP/JPY to clearly close below its previous significant low 159.70. A close below this low would give us the green light to short in all the remaining pairs.
Wait for GBP/JPY to close below the low 159.70, then go short in the other pairs including GBP/USD. Pound Dollar should have targets at the lower supportive trend line, a break below this trend line would mean you remain short with your target at 1.4065.