GBP/USD – 1.2825
As cable has remained under pressure after brief recovery, suggesting the fall from 1.3269 top is still in progress and bearishness remains for this fall to extend weakness to support at 1.2812, 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 1.2915-20 and renewed selling interest should emerge below previous support at 1.2933 (now resistance), bring another decline. Above 1.2970 would risk test of 1.3000 but only break of resistance at 1.3032 would suggest first leg of decline from 1.3269 has ended, bring a stronger rebound to 1.3100 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 1.2910 for 1.2710 with stop above 1.3010.
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.