Trade Idea: GBP/USD – Stand aside

GBP/USD – 1.2963





Original strategy :

Sold at 1.2910, stopped at 1.2970

Position: – Short at 1.2910

Target:  – 1.2710

Stop: – 1.2970




New strategy :

Stand aside

Position: –

Target:  –

Stop:- 



As cable found renewed buying interest at 1.2873 yesterday and staged a stronger-than-expected rebound, suggesting a temporary low has been formed at 1.2774 last week and consolidation with upside bias is seen for this rebound to bring retracement of recent decline from 1.3269, hence further gain to 1.3000 and possibly towards resistance at 1.3032 would be seen, however, near term overbought condition should limit upside to 1.3080, bring retreat later.

In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below 1.2900-10 would bring pullback to 1.2870-75, however, reckon downside would be limited and if our new that temporary low has been formed at 1.2774 is correct, downside should be limited to 1.2820-30 and bring another rebound later. 

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.