An update to our GBP/USD position as entered here, sold at 1.3150, stop at 1.3300. Finally, GBP/USD catches up with other dollar pairs and reaches the fall from 1.3297. The recovery from 1.3054 was in a way longer than we expected. But given that it drew support from 55 day EMA, that’s not too much of a surprise.
Overall outlook is unchanged that rise from 1.2661 is a corrective move that has completed with three waves up to 1.3297. Just ahead of 38.2% retracement of 1.4376 to 1.2661 at 1.3316. Focus is now on 1.3042 resistance turned support, which GBP/USD has breached already. Sustained trading below this 1.3042 will further affirm our bearish view and should at least target 1.2661/2784 support zone.
Meanwhile, it’s a bit early, but we’re looking at the chance of resuming whole down trend from 1.4376. Hence we haven’t decided whether we will exit the trade inside the 1.2661/2784 support zone. We’ll look at downside momentum of the current decline to make an assessment later. Ideally, the current fall is a wave 3, it should be rather powerful after taking out 1.3042. Though for now, we’d like to lower the stop to break even to guard against a strong reversal from 1.3042.
Hence to conclude, we’ll hold short (entered at 1.3150), lower the stop to breakeven at 1.3150, and wait-and-see how it plays out.