Wave analysis:

The area of 1.5835-1.5850 provided rather strong resistance for the further rise of the GBP/USD pair. As a result, wave 3 in terms of uptrend starting from the low of August 28, has a rather completed form. Thus, taking into account the fact that the indicators are considerably overbought, we expect further reverse of the pair to the level of figure 58 or even 50 points lower. At the same time dynamics in terms of development of the current uptrend may allow the pair to resume the growth, thus the whole upward channel takes more complex form and wave structure will demand for corresponding corrections.

Targets for down wave:

1.5750 – 23.6% of Fibonacci

1.5695 – 38.2% of Fibonacci

Targets for up wave:

1.5835 – 300.0% of Fibonacci

Summary and trading recommendations:

The British pound decided to complicate the inner wave structure of the uptrend channel. If this assumption is correct, then the rise of the quotes will continue with targets placed near the level 1.5835 and higher to the figure 59. In terms of correctional down wave the decline of the quotes may start with targets placed near the levels of 1.5750 and 1.5695, which is corresponding to 23.6% and 38.2% of Fibonacci. From the current positions the currency pair may start formation of new downward wave. MACD divergence points the readiness of the instrument for the corrective wave. Unsuccessful attempt to break the level of 1.5835 may lead to the reverse of the quotes from the reached highs.