GBP/USD – 1.3478
Original strategy :
Buy at 1.3450, Target:1.3650, Stop: 1.3390
New strategy :
Buy at 1.3400, Target:1.3600, Stop: 1.3340
Although cable bounced to 1.3552, renewed selling emerged there and has slipped again, suggesting consolidation below yesterday’s high of 1.3619 would be seen and retracement to 1.3440-50 is likely, however, reckon 1.3380-85 would limit downside and bring another rise later, above said resistance at 1.3552 would signal the retreat from 1.3619 has ended, bring retest of this level first. Looking ahead, a break of 1.3619 would extend recent upmove to 1.3650-60, then towards 1.3700. We have re-labeled our preferred count (pls see the attached chart) that the wave IV is unfolding as a complex double three (ABC-X-ABC) correction with 2nd wave B ended at 1.2774, hence 2nd wave C is unfolding and may extend further gain to 1.3650, then 1.3700, however, near term overbought condition should limit upside to 1.3770-75 and reckon 1.3800-10 would hold from here, bring retreat later.
In view of this, would not chase this rise here and would be prudent to buy sterling on subsequent pullback as 1.3380-85 should limit downside. Only below previous resistance at 1.3329 (now support) would abort and signal a temporary top is formed instead, bring deeper correction to 1.3290-00 and possibly towards 1.3250-60.
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.