• Last Candlesticks pattern: Shooting star
• Time of formation: 31 Jul 2017
• Trend bias: Down
• Last Candlesticks pattern: Morning star
• Time of formation: 25 Aug 2017
• Trend bias: Near term up
GBP/USD – 1.3172
As cable found decent demand just above 1.2900 last week and has rallied in part due to active cross-buying in sterling, suggesting recent rise from 1.2774 is still in progress and upside bias remains for further gain to1.3225-30, however, break of previous chart resistance at 1.3269 is needed to retain bullishness and signal medium term erratic rise from 1.1986 low has resumed for headway to 1.3300-10, then towards 1.3390-00 but price should falter well below 1.3500-05 (50% Fibonacci retracement of 1.5018-1.1986), bring retreat later.
On the downside, whilst initial pullback to 1.3095-00 cannot be ruled out, reckon the upper Kumo (now at 1.3087) would limit downside and bring another rise later. A daily close below the Tenkan-Sen (now at 1.3038) would defer and suggest top is possibly formed, bring test of 1.2996-99 (previous resistance and current level of the Kijun-Sen), however, break there is needed to provide confirmation, bring further fall to 1.2940-45 but support at 1.2909 should remain intact, bring rebound later.
Recommendation: Long entered at 1.2875 met upside target at 1.3020 with 145 points profit and would buy again at 1.3090 for 1.3290 with stop below 1.2990.
On the weekly chart, although last week’s rally formed a long white candlestick and gain to 1.3225-30 cannot be ruled out, break of recent high at 1.3269 is needed to retain bullishness and signal the erratic rise from 1.1986 low has finally resumed and extend gain to 1.3330-40, then towards 1.3400-10, however, near term overbought condition should prevent sharp move beyond 1.3500-05 (50% Fibonacci retracement of 1.5018-1.1986) and reckon 1.3600-10 would hold from here, risk from there is seen for a retreat later.
On the downside, expect pullback to be limited to 1.3090-00 and the Tenkan-Sen (now at 1.3022) should limit downside and bring another rise later to aforesaid upside targets. Below last week’s low at 1.2909 would defer and prolong choppy trading below said resistance at 1.3269, bring weakness to 1.2850-55 but break there is needed to signal the rebound from 1.2774 has ended, bring further fall to 1.2800, break there would indicate another leg of fall from 1.3269 top is still in progress and bring test of 1.2774, below there would extend this decline for retracement of recent upmove to 1.2685-90, however, reckon downside would be limited to previous support at 1.2589 and bring rebound later. .