Trade Idea: GBP/USD - Sell Again At 1.6440

GBP/USD - 1.6370

Recent wave: wave c of 4 rally from 1.3655 (11 March 2009) formed a temporary top at 1.6664

Trend : Gyrations inside 1.5803-1.6664

Our trading strategy: Sell again at 1.6440, Target:1.6300, Stop-loss:1.6510

The British pound did tumble from yesterday's high of 1.6467 (minor spike top) to as low as 1.6187 before rebounding, justifying our view that cable is going nowhere but gyrating inside the broad range of 1.5803-1.6664.

We will sell cable again on upticks in anticipation of another drop to 1.6300 or possibly re-test of 1.6187 support where a breach there will indicate a stronger retracement of the upmove from 1.5803 is under way and bring weakness to 1.6147/50 and then 1.6100/07 before staging a rebound.

On the upside, a breach of 1.6467 may bring gain to near term resistance at 1.6507, however, we are retaining our view that the British pound will continue to trade inside the 1.5803-1.6664 range in a volatile manner and the 1.6622/64 resistance area is expected to cap upside in the meantime before an upside break takes place later this month to indicate wave c upmove has resumed and bring further gain.

To re-cap the rally from 1.3500 (23 Jan 2009) is retracing intermediate decline from 1.8672 and although this move is viewed as a 4-wave type of corrective rise which is subdivided as a:1.4986, b:1.3655 and c is still under way.