GBP/USD – 1.2883
As cable has slipped again after brief recovery and broke below indicated support at 1.2999 and 1.2933, adding credence to our view that top has been formed at 1.3269 earlier this month and few weeks of consolidation below this level would be seen with downside bias for at least a correction of recent upmove, hence further weakness to support at 1.2812 is likely, break there would encourage for decline to 1.2775-80 (38.2% Fibonacci retracement of 1.1986-1.3269), then towards 1.2700, however, near term oversold condition should limit downside to 1.2650-60 and reckon 1.2620-30 (50% Fibonacci retracement) would hold from here, price should stay well above previous chart support at 1.2589, bring rebound later.
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 possibly ended at 1.7192, below support at 1.4232 would add credence to this count, then further fall to 1.4000 level would follow but reckon downside would be limited to 1.3655 support and price should stay above previous support at 1.3500.
On the upside, expect recovery to be limited to 1.2950-60 and renewed selling interest should emerge below resistance at 1.3032, bring another decline. A daily close above 1.3055-60 would defer and risk a stronger rebound to 1.3100-10 but still reckon upside would be limited to 1.3165 and price should falter well below said resistance at 1.3269, bring another decline later.
Recommendation: Sell at 1.3030 for 1.2800 with stop above 1.3130.
Longer term – Cable’s rise from 1.0520 (Feb 1985) to 2.0100 (September 1992) is seen as [A], the decline to 1.3682 is labeled as (B) and (C) wave rally has ended at 2.1162 (9 Nov, 2007) which is also the top of larger degree wave B with circle. The selloff from there is a 5-waver with wave (A) ended at 1.3500 (23 Jan 2009), wave (B) itself is labeled as A: 1.6733, triangle wave B: 1.4813 and wave C as well as top of wave (B) ended at 1.7192 (2014), hence the selloff from there is an impulsive wave (C) with wave I : 1.4566, wave II 1.5930, an extended wave III is unfolding and already exceeded our downside target at 1.3500 and 1.3000, hence weakness to 1.2500 and possibly 1.2000 cannot be ruled out, however, price should stay well above psychological level at 1.0000.