Trade Idea: EUR/GBP – Buy at 0.8985

EUR/GBP – 0.9012

New strategy  :

Buy at 0.8985, Target: 0.9085, Stop: 0.8945

Position : –

Target :  –

Stop : –

 
As the single currency has surged again after brief pullback and broke above previous resistance at 0.8993, suggesting the rise from 0.8746 low is still in progress, hence mild upside bias is seen for this move to extend further gain to previous resistance at 0.9048, break there would encourage for at least a strong retracement of the fall from 0.9307 to 0.9075-80 but near term overbought condition should limit upside to 0.9100, bring retreat later. 

In view of this, would not chase this rise here and would be prudent to buy euro on pullback as 0.8985-90 should limit downside and bring another rise. Below minor support at 0.8949 would suggest top is possibly formed, risk test of 0.8925 but only break support at 0.8906 would confirm top is formed, bring further fall towards 0.8875, having said that, support at 0.8850 should remain intact. Only a break there would provide confirmation that the rise from 0.8746 has ended and extend weakness to 0.8820-25 first. 

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.