EUR/GBP’s rebound from 0.8303 resumed last week and reached as high as 0.8766. The development suggests that fall from 0.9304 is completed at 0.8303. Rise from there is seen as the second leg of the consolidation pattern. Initial bias stays on the upside for 61.8% retracement of 0.9304 to 0.8303 at 0.8922 and above. On the downside, below 0.8646 minor support will turn bias neutral first. Break of 0.8449 support will start the third leg of the corrective pattern to 0.8303 and below.
In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. Deeper fall cannot be ruled out yet. But we’d expect strong support around 55 weeks EMA (now at 0.8260) to contain downside. Overall, the corrective pattern would take some time to complete before long term up trend resumes at a later stage. Break of 0.9304 will pave the way to 0.9799 (2008 high).
In the long term picture, firstly, price action from 0.9799 is seen as a long term corrective pattern and should have completed at 0.6935. Secondly, rise from 0.6935 is likely resuming up trend from 0.5680 (2000 low). Thirdly, this is supported by the impulsive structure of the rise from 0.6935 to 0.9304. Hence, after the consolidation from 0.9304 completes, we’d expect another medium term up trend to target 0.9799 high and above.