Low Risk, High Reward Trading Experiment

itme,

You stated,

"but my earlier predicition of 1.9834 is the most likely target from the perspective of my model. As far as the lower endpoint, it is possible for it to descend farther than we stated which was 1.9725, to 1.9690, which is another high probability reversal value. A descent into the 1.9660's is also possible."

Even though we have already this mark of 1.9836 on 12/3/2006 do you expect it to rise again to this mark before making its reversal?

Monarch

Tuesday December 5 at 4:00 ET

Trade Experiment #271 Buy GBP/JPY at 226.65

Stop is 226.19

Target is 230.00

Risk is 55 pips

Reward is 326 pips

Reward : Risk ratio is 5.9 to 1

For research purposes only

The wave hypothesis of this trade experiment is that GBP/JPY has gone up on a wave 1, 2, and 3 of Wave 5 and then down in an especially large Wave C of a wave 4 of Wave 5 down to the recent low of 226.48.

The rising GBP/USD, especially if USD/JPY also reverses and heads upwards, will cause a strong rise of GBP/JPY in its wave 5 of Wave 5 up to a new high at 230.00 or higher.

___________________________________________________________
___________________________________________________________

Last update:

GBP/JPY update for Monday December 3 at 5:00 ET

Our Trade Signal #257A Sell GBP/JPY at 226.74 would normally have been a successful trade, trading down from the top of Wave 3, but in this case the market was trending very strongly, so the corrective wave was proportionally smaller than usual, so it didn't reach our target because it was not adjusted to the strength of the trend.

We identified the top of Wave 3 correctly which occured at 226.93, only 19 pips past our short entry price. The bottom of Wave A of Wave 4 was at 225.71, which would have given us 94 pips of profit. However, we didn't notice that we had reached the bottom of Wave A of Wave 4 to exit at that point, which would have been the correct strategy, because we are trading too many currency pairs to stay on top of them all.

Wave 4 was forward leaning, so Wave B went higher than the top of Wave 3 by 23 pips to 227.16, but still short of our stop. Downwards Wave C only descended to 226.17, not as low as Wave A. The bottom of Wave C of Wave 4 at 226.17 on November 30 at 21:00 ET would have been an excellent re-entry opportunity for a long trade. (Of course, now that we have observed strong trend behavior, we realise that in this case the bottom of Wave A is the best entry price for this kind of trade.) Our Wave C bottom location procedure worked precisely to pin this price.

Our system would have given us a target of 228.97 for the Wave 1-2-3 impulse trade, and the price has since risen to 229.03, only 6 pips higher, on December 1 after tracing out a 1-2-3 pattern, a rise of 280 pips. Our stop in this trade would have been at 225.89, giving us a risk of only 37 pips, so the RRR would have been a healthy 7.3:1.

Since then we have witnessed the fourth corrective wave of the Fifth Wave, tracing out a medium sized A-B-C pattern with a forwards tilt. The inverted plateau at 228.20 which corresponded to the reversal price for GBP/USD would have been the perfect entry price at the bottom of Wave C, with a target of 230.00 to 230.50, for a profit of between 171 and 221 pips, with a risk of 50 pips considering a stop of 227.79, and therefore a RRR of between 3.4 and 4.4, making this a less than stellar trade opportunity.

Monarch, my hypothesis is that GBP/USD and EUR/USD are involved in a corrective downwards wave 4 and still on the upwards wave B (estimated top is 1.9825), to be followed by the downwards wave C (estimated bottom is about 1.9725), and then again followed by the larger order upwards Wave 5 (estimated top at 1.9900 or above).

The news so far this morning is positive for the EURO:

<table class="tborder" style="margin-top: 12px;" align="center" border="0" cellpadding="3" cellspacing="0" height="78" width="524"> <thead><tr><td class="alt1" nowrap="nowrap">Tue. 12/05</td> <td class="alt1"> 3:55am </td> <td class="alt1" align="center">EUR</td> <td class="alt1">German Services PMI</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">56.8</td> <td class="alt1" align="center">54.0</td> <td class="alt1" align="center">54.0</td> <td class="alt1" id="collapsecal_eventanalysis_3240" style="" align="center">
</td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3240" style="display: none;"> <tr> <td class="alt1" style="background-color: rgb(240, 254, 237); padding-bottom: 11px;" colspan="9" width="100%">

<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

The Services Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

</fieldset>

</td> </tr> </tbody><thead> <tr> <td class="alt1" nowrap="nowrap">
</td> <td class="alt1"> 4:00am </td> <td class="alt1" align="center">EUR</td> <td class="alt1">Services PMI</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">57.6</td> <td class="alt1" align="center">56.5</td> <td class="alt1" align="center">56.5


</td></tr></thead> </table> <table class="tborder" style="margin-top: 12px;" align="center" border="0" cellpadding="3" cellspacing="0" width="100%"> <thead><tr><td class="alt1"> 4:30am </td> <td class="alt1" align="center">GBP</td> <td class="alt1">Services PMI</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">59.8</td> <td class="alt1" align="center">58.0</td> <td class="alt1" align="center">59.3</td></tr></thead> </table>

hi itme, i have to say, i am astonished how you managed to predict the top reversal for GBP/USD. that is impressive. i´m starting to learn elliot wave and hope to become as wise as you are. but i think i will take me years to exactly understand the entire theory.

Hi Wallboroff,

Thanks for the encouragement. It isn't really that complicated in my opinion if you do the following:

Read, watch and learn the contents of this thread:

The Basics of Elliott Wave Theory

Then practise analysing, counting, labeling, predicting, strategising and trading as much as possible, employing a practise account.

Believe in the basics, but don't get too wrapped up in the elaborate and inflexible rules and regulations. Stick to the fundamentals, be aware of the guidelines, and remember that the Forex market is the real world, full of vagaries, and not a scientific laboratory. Waves get stretched, pulled, jammed and clipped.

Seek out low risk, high reward strategic entry points. Develop a game plan. Strategy is very, very important. Treat it like a contest or war game, seeking to minimize risk, maximize gain, and maximize probability of success.

Enter at only the ideal price in terms of Elliott Wave count and other criteria you might employ. Refuse to enter at any other than the ideal price. The ideal entry price is where risk is minimized (the smallest stop can be used), and where potential gain is maximized (the largest target can be aimed for).

Put in a sensible stop at the time of the trade entry, and don't adjust it.

Exit at a conservative price if you are in real doubt, or if there is an adverse announcement, but otherwise don't sell your trade short.

You only have to be correct half the time if you choose low risk / high reward trades, in order to be a very successful trader. With time and practise, you are bound to gradually improve.

This is a highly effective, and not too difficult trading style, that can be adapted to ANY timeframe or currency pair.

i think you´re right. right now i´m using trendlines with buying and selling pressure and want to see how effective this can be. after i studyied the fundamental of elliot wave, i try to combine these two thinks.

by the way, what do you think would be the proper timeframe. i know you can use for any timeframe but i´d like to know what you use?

If you use only the one day chart, you won't be able to count the intermediate waves properly, so your entries will be very inaccurate.

If you use only the 3 hour, 2 hour, or 1 hour chart, you will be able to recognise most, but not all of the intermediate wave counts, but you will be disoriented with regard to the larger wave patterns, which you must be highly aware of.

And if you don't consult the 5 minute and 1 minute charts ocassionally, you will not be able to count the intermediate waves properly, and come up with the wrong wave count sometimes.

The problem is that the size and duration of the wave cycles is constantly varying, so you need to adjust the scale of chart to the changing pace and volatility of the market.

What I do is pay carefull attention to the patterns, and adjust the scale of chart to the particular phase that the market is in, and go back and forth between different charts to solve the wave count.

The skill that needs to be developed is to recognise the wave patterns, keep careful count, trust in the basic formula, be flexible at times, and discriminate between the various orders of waves.

Tuesday December 5 at 18:30 ET

Trade Experiment #272 Buy GBP/CHF at 2.3574

Stop is 2.3539

Target is 2.3800

Risk is 50 pips

Reward is 211 pips

Reward : Risk ratio is 4.2 to 1

For research purposes only

Our analysis is that this trade is the fifth wave up of a large Wave C of an upwards WAVE 4.

_____________________________________________________
_____________________________________________________

Previous update:

GBP/CHF update for Monday December 3 at 5:00 ET

GBP/CHF is heading up now in a large Wave B of a downwards corrective Wave 4 of an even larger upwards impulse THIRD WAVE. We put the top of this upwards Wave B at about 2.3800, which will be a good low risk : high reward short opportunity, with a target at about 2.3300.

Soory Itme, the link seems broken.

Here we go:
http://www.forexfactory.com/forexfor...d.php/?t=10323

Just got stopped out on the long

<table class="tborder" style="margin-top: 12px;" align="center" border="0" cellpadding="3" cellspacing="0" width="100%"> <thead><tr><td class="alt1"> 8:30am </td> <td class="alt1" align="center">USD</td> <td class="alt1">Nonfarm Productivity q/q (f)</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">.2%
</td> <td class="alt1" align="center">0.5%</td> <td class="alt1" align="center">0.0%</td></tr></thead> </table>
The "Weak" in Fundamentals

How bad was Friday's ISM Manufacturing Report? The headline number (the one that draws most of the attention) came in at 49.5 (any reading below 50 indicates contraction). This was right on the heels of Thursday's Chicago PMI debacle, which was also below 50 (and well beneath estimates of 55.0).

But a look under the surface reveals that there is more damage than initially apparent. Here are some of the numbers behind the ISM number.... Once again, any number below 50 indicates contraction.

Employment Index 49.2 (just ahead of next week's NFP)
New Orders 48.7
Production Index 48.5

I could show you more, but you get the idea. We can't explain this away as an anomaly, because the weakness is systemic. Just in the past week, there were many notable cringe-worthy U.S. economic reports:

Durable Goods Orders -8.3% (expected at -5.0%)
Core Durable Goods -1.7% (expected to rise 0.4%)
Consumer Confidence 102.9 (expected at 106.4)
Chicago Purchasing Managers Index 49.9 (expected at 55.0)
New Unemployment Claims 357K (expected at 315K)
Construction Spending -1.0% (expected at -0.3%)

Is it any wonder the greenback is getting crushed? The one bright spot was U.S. Q3 GDP, which beat expectations handily (up 2.2% vs. 1.8% expected), but this resulted in just a brief respite for the beleaguered buck.

Although there is likely much profit in currency pairs like EUR/USD, GBP/USD, and other short-USD positions, there was no dramatic bout of profit taking on the last day of the week, or on the last day of November for that matter. This tells us that, at least for the moment and despite big profits, USD shorts have decided to hang on to their positions.

Why does someone hold on to a trade that is already hugely profitable? Because the trader believes that there could be more to come. Forex traders are fortunate to participate in a market that can break into strong, sustainable trends. It's during times like these when the greatest opportunities present themselves.

- Edward Ponsi, Forex Expert

OOPS! I forgot to carefully count the internal wave count of the last (fifth) wave down on the 1 or 5 minute chart! So I got in tooo early! Sorry!

Trade Experiment #272 Buy GBP/CHF at 2.3574

stopped out at low of 2.3511

Re-entry opportunity is pending....

Trade Experiment #271 Buy GBP/JPY at 226.65, on the other hand, has survived admirably ( until now).

Tuesday December 5 at 10:00 ET

Re-entry opportunity Trade Experiment #272A Buy GBP/CHF at 2.3510

Stop is 2.3458

Target is 2.3800

Risk is 67 pips

Reward is 275 pips

Reward : Risk ratio is 4.1 to 1

For research purposes only.

Our analysis is that this trade is the fifth wave up of a large Wave C of an upwards WAVE 4.
___________________________________________________
_______________________________________________________

Previous Trade Experiment:

Tuesday December 5 at 18:30 ET
Trade Experiment #272A Buy GBP/CHF at 2.3574
Stop is 2.3539
Target is 2.3800
Risk is 50 pips
Reward is 211 pips
Reward : Risk ratio is 4.2 to 1

For research purposes only

Our analysis is that this trade is the fifth wave up of a large Wave C of an upwards WAVE 4.

Hi itme, what you think of Eur/Aud pair?

Eur/Aud looks like a good sell to me right now..

<table class="tborder" style="margin-top: 12px;" align="center" border="0" cellpadding="3" cellspacing="0" width="100%"> <thead><tr><td class="alt1"> 10:00am </td> <td class="alt1" align="center">USD</td> <td class="alt1">ISM Non-Manufacturing Index</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">58.9</td> <td class="alt1" align="center">55.0</td> <td class="alt1" align="center">57.1</td> <td class="alt1" id="collapsecal_eventanalysis_3218" style="" align="center">
</td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3218" style="display: none;"> <tr> <td class="alt1" style="background-color: rgb(240, 254, 237); padding-bottom: 11px;" colspan="9" width="100%">

<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Investica Analysis</legend>

The manufacturing contraction has increased the importance of the services figure.

</fieldset> <fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

The Institute of Supply Management (ISM) Non-Manufacturing Index measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

</fieldset>

</td> </tr> </tbody><thead> <tr> <td class="alt1" nowrap="nowrap">
</td> <td class="alt1"> 10:00am </td> <td class="alt1" align="center">USD</td> <td class="alt1">ISM Non-Manufacturing Prices</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">55.6</td> <td class="alt1" align="center">52.5</td> <td class="alt1" align="center">51.9</td> <td class="alt1" id="collapsecal_eventanalysis_3219" style="" align="center">
</td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3219" style="display: none;"> <tr> <td class="alt1" style="background-color: rgb(240, 254, 237); padding-bottom: 11px;" colspan="9" width="100%">

<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

The Institute of Supply Management (ISM) Non-Manufacturing Price Index measures the monthly inflation experienced by non-manufacturing organizations when purchasing materials and services. The ISM surveys 400 firms to produce this index.

</fieldset>

</td> </tr> </tbody><thead> <tr> <td class="alt1" nowrap="nowrap">
</td> <td class="alt1"> 10:00am </td> <td class="alt1" align="center">USD</td> <td class="alt1">Factory Orders m/m</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">-4.7%</td> <td class="alt1" align="center">-3.5%</td> <td class="alt1" align="center">2.1%</td></tr></thead> </table>

itme,

This is the point I was making in reference to a price already hitting your expected mark such as GBP/USD which hit the 1.9834 and never returned back to that price, and is now down to the 1.9688 area that you predicted it to go to.

Is there a pattern that your expecting a double bounce to this area prior to its descent?

Monarch

Tuesday December 5 at 10:30 ET

Trade Experiment #273 Buy GBP/USD at 1.9680

Stop is 1.9648

Target is 1.9900

Risk is 36 pips

Reward is 216 pips

Reward : Risk ratio is 6.0 to 1

For research purposes only.

The recent high on GBP/USD at 1.9846, according to our analysis, is the top of Wave 3.3.5 (the top of an extended Wave 3). Based on the current wave pattern I believe that we have just completed Wave C of the downwards corrective A-B-C Wave 4, and that the turnaround point is 1.9680. This is in near agreement with the price movement suggested earlier by FixMe1-2.

After reversing at about 1.9680 the price is expected to rise about 220 pips in the form of an impulse Wave 5 up to at least 1.9900, which presents a potential low risk / high reward trade opportunity going long on GBP/USD.

p.s. - After leaving this chart and then returning to re-evaluate it, I believe that we are still not quite finished the downwards Wave A of the corrective Wave 4 following the large upwards Wave 3.3.5.

After the strong trending of the past weeks the market is shifting into "slow motion", and the cycle periods are lengthening logarithmically. Wave A may have reached its lowest point near to our long entry price of 1.9680 (the current low is 1.9677) , but the wave is not yet complete. It will either descend to put in a new low, or reverse at the upwards trendline at about 1.9705 to 1.9713 and then continue its climb to 1.9834 to 1.9880 to complete the upwards Wave B of the downwards Wave 4.

The next good low risk / high reward trade opportunity will be at the bottom of Wave A, when the last downwards mini-wave shows signs of completion, trading upwards to 1.9834 to 1.9880.

If our above wave hypothesis is incorrect, then the Waves A, B and C of the downwards corrective Wave 4 may all be complete, in which case the above long trade has the potential to rise all the way to 1.9900 and possibly beyond, depending on the outcome of announcements and other fundamental events along the way.

Upcoming announcements:

<table class="tborder" style="margin-top: 12px;" align="center" border="0" cellpadding="3" cellspacing="0" width="100%"> <thead><tr><td class="alt2" nowrap="nowrap">Wed. 12/06</td> <td class="alt2"> 12:00am </td> <td class="alt2" align="center">JPY</td> <td class="alt2">Leading Index m/m</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">50.0%</td> <td class="alt2" align="center">18.2%</td> <td class="alt2" id="collapsecal_eventanalysis_3245" style="" align="center">
</td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3245" style="display: none;"> <tr> <td class="alt1" style="background-color: rgb(240, 254, 237); padding-bottom: 11px;" colspan="9" width="100%">

<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

Measures overall economic health by combining ten indicators including average weekly hours, new orders, consumer expectations, housing permits, stock prices, and interest rate spreads. The Leading Index is published monthly by The Conference Board, a private US research group, but traders tend to pay little attention because the components that make up the index are reported at an earlier date.

</fieldset>

</td> </tr> </tbody><thead> <tr> <td class="alt2" nowrap="nowrap">
</td> <td class="alt2"> 4:00am </td> <td class="alt2" align="center">EUR</td> <td class="alt2">German Retail PMI</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">53.8</td> <td class="alt2" id="collapsecal_eventanalysis_3246" style="" align="center">
</td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3246" style="display: none;"> <tr> <td class="alt1" style="background-color: rgb(240, 254, 237); padding-bottom: 11px;" colspan="9" width="100%">

<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

The Retail Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the retail sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

</fieldset>

</td> </tr> </tbody><thead> <tr> <td class="alt2" nowrap="nowrap">
</td> <td class="alt2"> 4:30am </td> <td class="alt2" align="center">GBP</td> <td class="alt2">Industrial Production m/m</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">0.0%</td> <td class="alt2" align="center">0.2%</td> <td class="alt2" id="collapsecal_eventanalysis_3221" style="" align="center">
</td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3221" style="display: none;"> <tr> <td class="alt1" style="background-color: rgb(240, 254, 237); padding-bottom: 11px;" colspan="9" width="100%">

<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

Measures the total value of output produced by factories, mines, and utilities. A rising trend has a positive effect on the nation's currency because high levels of production are a sign of a strong economy. Industrial Production reacts quickly to the ups and downs of the business cycle and can be a leading indicator of manufacturing employment, average earnings, and personal income. Traders pay special attention to Industrial Production because it's one of the few growth indicators that is produced directly by the Federal Reserve.

</fieldset>

</td> </tr> </tbody><thead> <tr> <td class="alt2" nowrap="nowrap">
</td> <td class="alt2"> 4:30am </td> <td class="alt2" align="center">GBP</td> <td class="alt2">Manufacturing Production m/m</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">0.0%</td> <td class="alt2" align="center">0.0%</td> <td class="alt2" id="collapsecal_eventanalysis_3222" style="" align="center">
</td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3222" style="display: none;"> <tr> <td class="alt1" style="background-color: rgb(240, 254, 237); padding-bottom: 11px;" colspan="9" width="100%">

<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

Measures the total value of output produced by manufacturers. Manufacturing Production differs from Industrial Production in that it only measures the 13 sub-sectors of production that relate directly to manufacturing. Manufacturing industries make up about 80% of total Industrial Production.

</fieldset>

</td> </tr> </tbody><thead> <tr> <td class="alt2" nowrap="nowrap">
</td> <td class="alt2"> 6:00am </td> <td class="alt2" align="center">EUR</td> <td class="alt2">German Factory Orders m/m</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">0.6%</td> <td class="alt2" align="center">-2.5%</td> <td class="alt2" id="collapsecal_eventanalysis_3247" style="" align="center"> [] </td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3247" style="display: none;"> <tr> <td class="alt1" style="background-color: rgb(240, 254, 237); padding-bottom: 11px;" colspan="9" width="100%">

<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

Measures the value of new purchase orders placed with domestic manufacturers for hard goods with a life expectancy of more than 3 years, such as automobiles, computers, appliances, and airplanes.

</fieldset>

</td> </tr> </tbody><thead> <tr> <td class="alt2" nowrap="nowrap">
</td> <td class="alt2"> 8:15am </td> <td class="alt2" align="center">USD</td> <td class="alt2">ADP Nonfarm Employment Change</td></tr></thead> </table>

Tuesday December 5 at 11:00 ET

After more reflection it seems probable that GBP/USD will descend to a new low. Therefore exit Trade Experiment #273 Buy GBP/USD at market price of 1.9705 to 1.9740, taking 20 to 55 pips of profit. Re-enter a long trade at the bottom of the downwards wave 5, at about 1.9680 (assuming a failed fifth wave, which is possible) or lower (as low as about 1.9600 - more likely).
__________________________________________________________
__________________________________________________________

Previous trade experiment:

Tuesday December 5 at 10:30 ET

Trade Experiment #273 Buy GBP/USD at 1.9680
Stop is 1.9648
Target is 1.9900
Risk is 36 pips
Reward is 216 pips
Reward : Risk ratio is 6.0 to 1

For research purposes only.

The recent high on GBP/USD at 1.9846, according to our analysis, is the top of Wave 3.3.5 (the top of an extended Wave 3). Based on the current wave pattern I believe that we have just completed Wave C of the downwards corrective A-B-C Wave 4, and that the turnaround point is 1.9680. This is in near agreement with the price movement suggested earlier by FixMe1-2.

After reversing at about 1.9680 the price is expected to rise about 220 pips in the form of an impulse Wave 5 up to at least 1.9900, which presents a potential low risk / high reward trade opportunity going long on GBP/USD.