EUR/GBP – 0.8563

Recent wave: v of wave 3 has possibly ended at 0.8067 but wave 4 should hold below 0.9050

Trend: Down

Original strategy : 

Sell at 0.8650, Target: 0.8510, Stop: 0.8690

Position: -
Target:  -
Stop:-

New strategy  : 

Sell at 0.8650, Target: 0.8510, Stop: 0.8690

Position: -
Target:  -
Stop:-

Despite yesterday’s resumption of decline to 0.8486, the subsequent rebound suggests a minor low is formed there and consolidation with mild upside bias is seen for retracement to 0.8600 and possibly towards resistance 0.8657 but renewed selling interest should emerge there and bring another decline later.  We are keeping our view that the wave 2 is still unfolding as a complex correction with first set of a-b-c ended at 0.8531, another set of a-b-c is now in progress, break of said support at 0.8486 would extend weakness to 0.8450/55, however, price should stay well above support at 0.8357 and bring a strong rebound later.

In view of this, we are still looking to sell euro on further recovery. Above 0.8680/90 would suggest a temporary low is possibly formed and risk rebound to 0.8720 and possibly to 0.8750 but only break of resistance at 0.8831 would abort and signal the fall from 0.9045 has ended, then gain towards pivotal resistance at 0.8886 would follow.

Our preferred count is that, after forming a major top at 0.9805 (wave V), (A)-(B)-(C) correction is unfolding with (A) leg ended at 0.8400 (A: 0.8637, B: 0.9491 and 5-waver C ended at 0.8400. Wave (B) has ended at 0.9413 and impulsive wave (C) has either ended at 0.8067 or may extend one more fall to 0.8000 before prospect of another rally. Current breach of indicated resistance at 0.9043 confirms our view that the (C) leg has ended and bring stronger rebound towards 0.9150/54, then towards 0.9240/50.