EUR/GBP Elliott Wave Analysis

EUR/GBP may extend marginally below 0.8400 but 0.8323 shall hold and bring strong rebound...

The single currency fell to as low as 0.8421 this week, suggesting the corrective decline from 0.9805 top, which is developed into A-B-C type of correction pattern, is still under way and may extend marginally below 0.8400, however, we are still retaining the view that downside will be limited somewhat and the decline shall be contained well above 0.8323 (Fibonacci equality projection of 0.9805-0.8637 measured from 0.9491) and bring strong rebound later.

On the upside, a breach of 0.8865/71 this time will signal wave C correction has formed a temporary low and bring rebound to 0.9082 where a daily close above there will violate recent series of lower highs and lower lows and yield resumption of long-term uptrend from low of 0.5682 (23 March 2000), possibly in Q4.

Euro's long term uptrend started in May 2000 with an impulsive structure. The rally from 0.5682 to 0.7254 (27 May 2003) is labeled as I, II was ended at 0.6536 (23 Jan 2007), III is possibly capped at 0.9805 with IV is now unfolding into a simple A-B-C type of correction pattern as described above.