Weekly
   •   Last Candlesticks pattern: Shooting star
   •   Time of formation: 5 Sep 2016
   •   Trend bias: Down
Daily
   •   Last Candlesticks pattern: Long black candlestick
   •   Time of formation: 24 Jun 2016
   •   Trend bias: Down
GBP/USD – 1.2472
Although the British pound fell to as low as 1.2109 early last week, cable found decent demand there and staged a much stronger-than-expected rebound, dampening our bearishness and suggesting the fall from 1.2706 has ended there, hence consolidation with upside bias is seen for this rise from 1.2109 to extend further gain to 1.2500, then test of resistance at 1.2570, however, as broad outlook remains consolidative, reckon upside would be limited to 1.2600-10 and price should falter well below said resistance at 1.2706, bring retreat later.
On the downside, whilst initial pullback to 1.2400 cannot be ruled out, reckon support at 1.2335 would limit downside and bring such a rise later. Only a daily close below the Tenkan-Sen (now at 1.2292) would abort and suggest the rebound from 1.2109 has ended instead, risk weakness to 1.2240-45 and possibly towards 1.2200 but price should stay well above said support at 1.2109 (this month’s low), bring rebound later.
Recommendation: Buy at 1.2335 for 1.2535 with stop below 1.2235.Â
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On the weekly chart, although cable slipped early last week to 1.2109, the subsequent strong rebound formed a white candlestick, suggesting the fall from 1.2706 has ended there and consolidation with mild upside bias is seen for further gain to 1.2570 resistance, however, as broad outlook remains consolidative, reckon upside would be limited to 1.2650 and said resistance at 1.2706 would hold from here. Only a break of this resistance would shift risk to upside and signal another leg of corrective rise from 1.1986 low is underway for retracement of early downtrend to previous resistance at 1.2775 and later 1.2850-60 but price should falter below psychological resistance at 1.3000.
On the downside, expect pullback to be limited to 1.2400 and renewed buying interest should emerge around 1.2335 and bring another rise to aforesaid upside targets. Below 1.2240-50 would suggest the rebound from 1.2109 has ended instead, risk weakness to 1.2190-00 but downside should be limited to 1.2140-50 and said support at 1.2109 should remain intact. Only a drop below 1.2109 support would revive bearishness and extend weakness to 1.2050 but price should stay well above support at 1.1986.
