EUR/GBP – 0.8700

 
Recent wave: Major double three (A)-(B)-(C)-(X)-(A)-(B)-(C) is unfolding and 2nd (A) has possibly ended at 0.6936.

Trend: Near term up

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Original strategy  :

Buy at 0.8620, Target: 0.8750, Stop: 0.8580

Position : –

Target :  –

Stop : –

New strategy  :

Sell at 0.8735, Target: 0.8610, Stop: 0.8775

O.C.O.

Buy at 0.8600, Target: 0.8750, Stop: 0.8565

Position : –

Target :  –

Stop : –

 
As the single currency has retreated after marginal rise to 0.8755, suggesting a temporary top is possibly formed and consolidation below this level is seen with mild downside bias for test of 0.8655 support, break there would add credence to this view, bring retracement of recent rise to 0.8620-25, then test of 0.8600-03 support where renewed buying interest should emerge, bring another rise later. Above said resistance at 0.8755 would extend recent rise from 0.8312 low to 0.8770, then test of resistance at 0.8788, however, reckon upside would be limited to 0.8800-10.

In view of this, whilst we are still looking to buy euro on dips, we would also sell euro on recovery as 0.8730-35 should limit upside. Below 0.8565-70 would abort and signal a temporary top is formed, bring correction to 0.8550 and possibly towards support at 0.8524 which is likely to hold from here.

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.

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