GBP/USD – 1.3127
Original strategy :
Buy at 1.3040, Target:1.3200, Stop: 1.2980
New strategy :
Buy at 1.3125, Target:1.3300, Stop: 1.3065
As cable has maintained a firm undertone after last week’s rally, suggesting bullishness remains for the rise from 1.2774 to extend gain towards recent high at 1.3269, however, break there is needed to retain upside bias and signal recent upmove has resumed for headway to 1.3300-10, having said that, overbought condition should prevent sharp move beyond 1.3340-50 and price should falter well below 1.3390-00, bring retreat later.
In view of this, would not chase this rise here and would be prudent to buy sterling on subsequent pullback as 1.3120-25 should limit downside. Below previous resistance at 1.3080-85 would defer and risk test of 1.3030-33 support, however, only break of latter level would signal a temporary top is formed, brig correction to 1.2990-00 first.
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.