Trade Idea: GBP/USD – Buy at 1.2775

GBP/USD – 1.2935

Recent wave: Wave V of larger degree wave (III) has ended at 1.1986 and major correction has commenced from there for gain to 1.3000 and 1.3140-50

Trend: Near term up

Original strategy :

Buy at 1.2865, Target: 1.3025, Stop: 1.2805

Position: –
Target:  –
Stop: –

New strategy :

Buy at 1.2775, Target: 1.2965, Stop: 1.2715

Position: –
Target:  –
Stop:-

Although cable has rebounded after finding support at 1.2831, break of recent high at 1.2965 is needed to confirm recent upmove has resumed and extend further gain to psychological resistance at 1.3000 but overbought condition should limit upside to 1.3050 and price should falter below 1.3100. If said resistance at 1.2965 continues to hold, then further choppy trading would take place and another corrective fall to 1.2831 cannot be ruled out, however, reckon 1.2770-75 would limit downside and bring another rise later. We are keeping our view that the wave c as well as larger degree wave B has ended at 1.2109, hence impulsive wave C has commenced from there with wave i of C ended at 1.2616, follow by a correction to 1.2365 (end of wave ii) and wave iii rally is unfolding, hence further gain to indicated upside targets would be seen.

Our preferred count on the daily chart is that cable’s rebound from 1.3500 (wave (A) trough) is unfolding as a wave (B) with A ended at 1.7043, followed by triangle wave B and wave C as well as wave (B) has ended at 1.7192, the subsequent selloff is the larger degree wave (C) which is still unfolding with minor wave (III) of larger degree wave 3 ended at 1.1986, hence wave (IV) correction is in progress which could either be a triangle wave (IV) of a complex formation but upside should be limited to 1.3500 and price should falter well below 1.4000, bring another decline in wave (V) of 3 for weakness to 1.1500, then 1.1200.

On the downside, below said support at 1.2831 would bring weakness to support at 1.2805 but reckon downside would be limited and support at 1.2757 should hold, bring another rise later. A drop below this support would defer and signal a temporary top is formed instead, risk correction of recent upmove to 1.2700-10 later.