GBP/USD – 1.3137
Original strategy :
Sold at 1.3170, Target: 1.3000, stop: 1.3230
Position: – Short at 1.3170
Target: – 1.3000
Stop: – 1.3230
New strategy :
Hold short entered at 1.3170, Target: 1.3000, stop: 1.3230
Position: – Short at 1.3170
Target: – 1.3000
Stop:- 1.3230
Although sterling rebounded to as high as 1.3178 yesterday, as this move from 1.3039 (last week’s low) is still viewed as retracement of recent decline, reckon upside would be limited to 1.3200 and bring another decline later, below 1.3070-75 would suggest the rebound from 1.3039 has ended and bring retest of this level later. Looking ahead, a break below recent low at 1.3027 would confirm early decline from 1.3658 top has resumed for weakness to psychological support at 1.3000, break there would encourage for further decline towards 1.2950-60 later.
In view of this, we are holding on to our short position entered at 1.3170. Above 1.3220 would defer and prolong choppy consolidation, risk rebound to 1.3250-60 but resistance at 1.3299 should limit upside and price should falter below last week’s high at 1.3321, bring another retreat later. 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.
