07 March 2016, GBP/USD
Wave Analysis:
GBP/USD is currently trading with a bullish bias. During the previous trading day, pound traded long and even crossed above the key pivot level 1.4206. Since the intraday stochastic is trading along its overbought level of 80, the supply of this pair will in time surpass its demand, meaning, we expect a rebound from this level to signal a reversal to the lower side. We will thus be keen to look for short positions upon a clear bounce, or buy upon a clear breakout above 1.42201. This pair should be traded alongside other positively correlated pairs such as GBP/HKD, GBP/JPY, NZD/JPY, and NZD/USD. These pairs have a strong positive correlation of up to +0.89 and are thus expected to have a similar price pattern. Therefore, only buy or sell pound if all the other positively correlated pairs are giving the same signal.
Trade Recommendation:
Wait for clear break above1.42201 to go long with an ultimate target at 1.4395. A clear rebound from the zone 1.4202-1.42201, would mean looking for short positions with an ultimate target at 1.4065
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