GBP/USD – 1.3076
New strategy :
Sell at 1.3170, Target: 1.3000, stop: 1.3230
Friday’s selloff together with the breach of previous support at 1.3070 signals early erratic rise from 1.3027 has ended at 1.3338 and bearishness remains for another test of this support, break there 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, would not chase this fall here and would be prudent to sell sterling on recovery as 1.3160-70 should limit upside. Above 1.3020 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.