Trade Idea: EUR/GBP – Stand aside

EUR/GBP – 0.8982

Original strategy  :

Sold at 0.8930, stopped at 0.8970

Position : – Short at 0.8930

Target :  –

Stop : – 0.8970

New strategy  :

Stand aside

Position : –

Target :  –

Stop : –

 
The single currency has rebounded after finding support at 0.8906 earlier this week, suggesting the pullback from 0.8993 has ended and retest of said resistance is likely, break there would extend the rise from 0.8746 low for retracement of recent decline to 0.9020-25 and later towards resistance at 0.9048 which is likely to hold from here due to loss of upward momentum.

In view of this, would not chase this rise here and would be prudent to stand aside for now. Below 0.8935-40 would bring another test of said support at 0.8906 but break there is needed to revive bearishness and signal top has been formed at 0.8993, bring further fall to 0.8870-75, then test of support at 0.8850, only break there would provide confirmation and extend weakness to 0.8820-25 but the single currency needs to penetrate 0.8800-05 to signal the rebound from last month’s low at 0.8746 has ended, then subsequent decline to 0.8770 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.