EUR/GBP Weekly Outlook

EUR/GBP turned into sideway trading after rising to as high as 0.9494. 4 hours MACD's cross below signal line argues that a short term top might be formed. Outlook is turned neutral for the moment with focus back to 0.9144 support. Note that rise from 0.8635 is still expected to continue as long as this 0.9144 support holds. Above 0.9416 will flip bias back to the upside for testing 0.9494/9518 resistance zone.

In the bigger picture, most importantly, note that rise from 0.7693 has completed with five waves up to 0.9799 (0.8195, 0.7808, 0.8660, 0.8234, 0.9799). Also, whole medium term rise from 0.6535 has probably completed the five wave sequence too (0.6867, 0.6678, 0.8186,. 0.7693. 0.9799). Subsequent price actions from 0.9799 is treated as correction to the up trends and it's uncertain how such correction/consolidation will be unfolded as.

If the whole correction has completed with three waves down to 0.8635, rise from there should develop into a five wave rally to retest 0.9799 high. This remains the preferred case as long as 0.9144 support holds. However, break of 0.9144 will indicate that rise from 0.8635 has completed. The three wave structure (0.9071, 0.8725, 0.9494) will in turn suggests that it's merely part of the consolidation that started at 0.9799 and fall from 0.9494 should then be the third leg. In such case, deeper decline should be seen to 0.8635 and below, with prospect for further fall to 0.8186/8234 (50% retracement of 0.6535 to 0.9799 at 0.8167) before completing the consolidation.

In the long term picture, it's too early to conclude whether long term rise from 0.5680 has completed. Nevertheless, it's no doubt that a medium term top is formed at 0.9799 after meeting 200% projection of 0.5680 to 0.7250 from 0.6535 at 0.9765. As long as mentioned 0.8186/8234 key cluster support zone holds (38.2% retracement of 0.5680 to 0.9799 at 0.8223) holds, we'll treat price actions from 0.9799 as a correction/consolidation in the long term up trend only. However, sustained break of mentioned support zone will be an important signal that the long term rise has completed and will pave the way for deeper fall to next key support level of 0.7258 (61.8% retracement of 0.5680 to 0.9799 at 0.7253) next.

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