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Correction to the upperside

20 September 2016, GBP/USD

Correction to the upperside

Wave Analysis

During the previous trading week, the corrective wave D went higher than expected and even broke above the upper trend line forming top of the wedge. We expect the current downward rally to be the continuation of the impulsive wave E and should be extensive in nature. The current upward rally is a mere corrective sub-wave and should not go beyond the upper trend line. Instead of going short immediately, we wait for bearish candles along the upper trend line to give us low risk sell opportunities. This view an only be invalidated in case the current corrective rally end up above the upper trend line, if the latter is the case, then we expect an acceleration to the upper side. Trade this pair alongside GBP/HKD, EUR/USD, NZD/USD and AUD/USD.

Trade Recommendations

Wait for minor retracements towards the upper trend line to sell this pair with an ideal target along the lower trend line.

Graham Osano
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