It is a beginning of a new week after thanksgiving and I was just looking at the GBP/USD charts.

As you know that the USD is just becoming strong and having a good rally against all the major currencies.

From the fundamental analysis perspective, it is because of multiple factors like -

Better Job market and economy
Better housing market
and ofcourse, pretty week outlook for Euro nations.

Now if you look from technical perspective, it makes sense as well.

Take a look at daily GBP/USD chart -

1. The bullish run for GBP/USD started way back in May-2010 forming 1t elliott wave
2. The market reversed temporarily in Aug-2010 and made the 2nd Elliott wave
3. The 3rd elliott wave started in Sep-2010
4. 4th elliott wave, which is a pull back started in Oct-2010
5. And finaly the 5th and final elliott wave started in Nov-2010.

It is observed that in 85-90% of cases, the market reverses significantly as soon as the 5th elliott wave is formed.

So, as you can see in the chart, the GBP/USD reversed and is having significant bearish run where in it broke the low created by the 4th elliott wave which is a kind of indication that the previous elliott wave pattern has ended.

Now, the next obvious question is -

"Where will the market find support and then reverse"?

As per me, the currency pair is supposed to get a good support at 1.5400 which is

1. The low created by 2nd elliott wave
2. Ands is also the 50% fibonacci retracement level created  by May-2010 to Oct-2010 rally
3. The high created in apr-2010
4. And also, it is the 00 level..

So, this looks to be a good support area.

So, if you are having an open trade, keep a watch for 1.5400 level to exit trade or open a new trade once the market bounces from this.

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