GBP/USD – 1.3490
Original strategy :
Bought at 1.3260, met target at 1.3450
Position: – Long at 1.3260
Target: – 1.3450
New strategy :
Buy at 1.3410, Target: 1.3600, Stop: 1.3350
Cable rallied in line with our bullish expectation, our long position entered at 1.3260 met upside target at 1.3450 (with 190 points profit), this anticipated rise adds credence to our view that entire correction from 1.3658 has ended at 1.3027 earlier and upside bias remains for the rise from 1.3027 to extend gain to 1.3550, then 1.3595-00, however, reckon said recent high at 1.3658 (Sept high) would hold from here due to near term overbought condition, bring 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.
As we have taken profit on our long position entered at 1.3260, would be prudent to buy sterling again on pullback as 1.3400-10 should limit downside and bring another rise later. Below previous resistance at 1.3383 would defer and risk correction to 1.3335-40, break there would confirm top is formed instead, bring further fall to 1.3290-00 first.
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.