EUR/GBP Elliott Wave Analysis

EUR/GBP – 0.8625

EUR/GBP – Major A-B-C wave from 0.9805 top should end soon.

We have revised our preferred count on the daily chart as indicated below, the wave V of a 5-wave series from 0.5682 has ended at 0.9805 earlier and major A-B-C correction is unfolding with A: 0.8637, B: 0.9491 and wave C is a 5-waver with 1: 0.9158, 2: 0.9418, extended wave 3 ended at 0.8576 followed by wave 4 at 0.8868. The wave 5 has either ended at 0.8400 last week (as it already reached 50% projection target of 1-3 from 4 at 0.8410) or may extend marginally towards 0.8323 (100% projection of wave A), however, downside would be limited to 0.8297 (61.8% projection target of 1-3 from 4). Once price rises above 0.8868 resistance (wave 4 top), this would confirm the wave 5 as well as wave C has ended, then strong rebound to 0.9082 would follow.

However, this end of wave C is not the end of entire correction from 0.9805 but the larger degree wave (A), therefore, the rebound from there would be the A-leg of wave (B) and whilst gain to 0.9268 (61.8% Fibonacci retracement of 0.9805 to 0.8400) cannot be ruled out, price should falter well below resistance at and 0.9491 (B wave top).

On the downside, if price drops below 0.8297 level, this would mean the wave C is still extending and fall towards 0.8047 (1.236 times projection of wave A), however, sharp decline below psychological support at 0.8000 is unlikely and we expect 0.7747 (50% Fibonacci retracement of 0.5682 to 0.9805) to remain intact.

Euro's long term uptrend started in Feb 1981 at 0.5039 and is unfolding as a (A)-(B)-(C) move with (A): 0.8433 (Feb 1993), (B): 0.5682 (May 2000) and impulsive wave (C) should have ended at 0.9805 with wave III ended at 0.7254 (May 2003), triangle wave IV at 0.6536 (23 Jan 2007) and wave V as well as wave (C) has ended at 0.9805.

In the event the single currency stage a firm break above resistance at 0.9491 (or preferably above 0.9500), this would signal correction from 0.9805 is over and our alternate count is that only wave III has ended at 0.9805, then wave V may head towards psychological resistance at 1.0000.