GBP/USD Analysis 031411

Hi all, ready to start the week?
Here's my view on GBP/USD today, again I'll be using only basic analysis concept using Bollinger Bands. It might look complicated but actually no, it's really simple.
It's based on KG's wave and time concept.
Simply put the smaller waves move in the bigger waves direction, and the bigger waves are formed by the smaller waves. And we divide the waves based on time.

Let's start with monthly (480 period)



Notice the middle band (it's SMA by the way)is rather flat, it's indicating that monthly is in sideways phase. But notice also the price is already outside the SD 1 zone, it's below SD -1 band. The price tried to retest the band on Friday but unable to break it.
So here it's already in abnormal condition, an indication that a downtrend might occur. But if the price breaks the SD -1 band then monthly will be in normal or sideways condition and the next target might be the middle band.

Now, let's see the weekly move (120 period)



The price is outside the SD 1 zone, it's below SD -1 band, notice the middle is pointing down, so weekly is in downtrend or abnormal down phase. So here our assumption is down unless the price breaks SD -1 band. If it happens then weekly will be in normal phase and the next target might be the middle band.

Now daily (24 period) move



Daily is really in sideways or normal phase. Notice the middle band is flat, and price currently is right at the middle, this is a gray situation.
The next move will start from here. If price managed to break the daily SD 1 and weekly SD -1 bands, then daily will enter uptrend phase while weekly will enter normal phase. And assuming monthly SD -1 band is also broken the next target might be the weekly middle band.
On the other hand if price moves down then the downtrend at weekly continues and our focus will be the daily SD -1 band, if it's broken then daily will be in downtrend phase following the weekly. It also means that monthly too will be in downtrend phase.

So what do we do next? Now we'll use LSMA to determine direction.



Notice LSMA is pointing up but price is below it, an indication that there's an effort to reverse direction. So what we do here is we'll watch how the price and the LSMA react. Enter only when direction is confirmed and the way is clear.