Trade Idea: EUR/GBP – Sell at 0.8900

EUR/GBP – 0.8815

Original strategy  :

Sell at 0.8920, Target: 0.8820, Stop: 0.8960

Position : –

Target :  –

Stop : –

New strategy  :

Sell at 0.8900, Target: 0.8755, Stop: 0.8940

Position : –

Target :  –

Stop : –

 
As the single currency has fallen again after brief recovery, adding credence to our bearish view that top has been formed at 0.9033 earlier and downside bias remains for the erratic decline from there to extend further fall to 0.8746-50, then towards 0.8720, however, near term oversold condition should limit downside and reckon 0.8700 would hold from here. 

In view of this, we are looking to sell euro again on recovery, above 0.8845-50 would bring corrective bounce to 0.8880 but renewed selling interest should emerge around 0.8900-10 and bring another decline later. Only above 0.8957 resistance would abort and shift risk to upside for test of 0.8976 but reckon upside would be limited to 0.9000 and said resistance at 0.933 should remain intact, bring another decline later.

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.