GBP/USD – 1.3135
New strategy :
Sell at 1.3175, Target: 1.3005, Stop: 1.3235
As sterling met resistance at 1.3228 yesterday and has retreated quite sharply, suggesting the rebound from 1.3088 has ended and test of this level is likely, break there would extend weakness to recent low at 1.3027 but break there is needed to retain bearishness and confirm recent decline has resumed for test of psychological level at 1.3000 and later towards 1.2950-60 which is likely to hold from here due to near term oversold condition.
In view of this, we are looking to sell cable on recovery as 1.3170-75 should limit upside and bring another decline. Above said resistance at 1.3228 would abort and prolong consolidation, then the rebound from 1.3088 may extend gain to 1.3270-75 but as outlook remains consolidative, reckon upside would be limited to 1.3287 and price should falter well below resistance at 1.3338. Our preferred count is that (pls see the attached chart) 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 could have ended at 1.3658.
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.