GBP/USD – 1.3262
Sterling continued heading north and broke above recent high at 1.3269, confirming the medium term erratic rise from 1.1986 low has resumed and bullishness remains for this move to extend further gain to 1.3300-10, then towards 1.3350-55 (50% projection of 1.2109-1.3269 measuring from 1.2774), however, reckon upside would be limited to previous chart resistance at 1.3445 and price should falter well below dynamic resistance at 1.3500-05 (50% Fibonacci retracement of 1.5018-1.1986), risk from there is seen for a retreat 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 downside, whilst initial pullback to 1.3200 cannot be ruled out, reckon downside would be limited to support at 1.3161 and bring another rise later. Below 1.3080-85 would defer and risk correction to 1.3015-20 but still reckon downside would be limited and as long as 1.2996 (previous minor resistance) holds, prospect of another rise remains. A drop below 1.2996 would defer and suggest top is formed instead, risk weakness to 1.2950-60 and possibly test of support at 1.2909 but price should stay above support at 1.2852, bring rebound later.
Recommendation: Buy at 1.3165 for 1.3365 with stop below 1.3065.
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.