EUR/GBP stayed in consolidation pattern from 0.8469 last week and outlook is unchanged. Initial bias stays neutral first. At this point, we’re tentatively viewing fall from 0.8851 as the third leg of the corrective pattern from 0.9304. Hence, we’d expect upside of the recovery from 0.8469 to be limited by 50.% retracement of 0.8851 to 0.8469 at 0.8660 to bring fall resumption. Below 0.8469 will turn bias to the downside for 0.8303 low. However, firm break of 0.8660 will indicate that rise from 0.8303 is still in progress and would turn bias to the upside for 0.8851 resistance and above.
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 from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) 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.