Trade Idea: EUR/GBP – Sell at 0.8975

EUR/GBP – 0.8939

Original strategy  :

Sell at 0.8965, Target: 0.8825, Stop: 0.9005

Position : –

Target :  –

Stop : –

New strategy  :

Sell at 0.8975, Target: 0.8855, Stop: 0.9015

Position : –

Target :  –

Stop : –

 
Although the single currency rebounded after holding above support at 0.8856 and further consolidation above this level would be seen, if our view that top has been formed at 0.9033 last week is correct, reckon upside would be limited to 0.8965-75 and bring another decline later, below said support at 0.8850-56 would add credence to this view and signal the rebound from 0.8746 low has ended, bring further fall to 0.8800-10 later. 

In view of this, would be prudent to sell euro on recovery as 0.8965-75 should limit upside. Above 0.8985-90 would defer and risk a stronger rebound to 0.9000 but price should falter well below said resistance at 0.9033, bring another selloff.

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.