EUR/GBP – 0.8821

Original strategy  :

Sell at 0.8885, Target: 0.8750, Stop: 0.8920

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Position : –

Target :  –

Stop : –

New strategy  :

Buy at 0.8755, Target: 0.8855, Stop: 0.8720

Position : –

Target :  –

Stop : –

 
Although the single currency extended recent fall to as low as 0.8690 last Friday, the subsequent reversal suggests low has possibly been formed there and consolidation with mild upside bias is seen for a test of resistance at 0.8868, however, break above there is needed to add credence to this view and suggest the decline from 0.9015 has ended, bring further gain to 0.8890-00 later.

In view of this, we are looking to turn long on dips as 0.8755-60 should limit downside and bring another rebound. Below 0.8720-25 would risk retest of 0.8690 but only break there would revive bearishness and signal the fall from 0.9015 is still in progress and may extend weakness to 0.8660-65 and then 0.8640-45. 

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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