GBP/USD cautious, could allow a small recovery – Commerzbank

In view of Karen Jones, Head of FICC Technical Analysis at Commerzbank, Cable could still attempt a small recovery in the near term.

Key Quotes

“GBP/USD has rallied strongly higher but remains in the middle of a converging range. It is recovering but we would continue to exercise extreme caution. The pattern could be either a bullish base or a negative triangle. Given the prior sell off the risks must remain on the downside. As a precaution we have exited long positions”.

“The intraday Elliott wave continues to suggest some scope for near term recovery. Above here we have the top of the triangle pattern at 1.3425 and 1.3534, the 29th June high and we remain unable to rule out a rally to 1.3638, the 38.2% retracement and potentially 1.4158, the 61.8% retracement of the recent sell off”.