EUR/GBP – 0.8586
Recent wave: Major double three (A)-(B)-(C)-(X)-(A)-(B)-(C) is unfolding and 2nd (A) has possibly ended at 0.6936.
Trend: Near term down
New strategy :
Sell at 0.8620, Target: 0.8520, Stop: 0.8660
Position : –
Target : –
Stop : –
The single currency ran into renewed selling interest at 0.8735 and has dropped sharply, support at 0.8605 was penetrated, adding credence to our view that top has been formed at 0.8788 and downside bias is seen for the fall from there to bring retracement of early upmove, hence further weakness to 0.8560-65 (61.8% Fibonacci retracement of 0.8422-0.8788) would be seen, break there would extend fall to support at 0.8547 and possibly 0.8520 but reckon 0.8509 support would hold from here.
In view of this, we are looking to sell euro on recovery as 0.8620-25 should limit upside. Only above 0.8660-65 would defer and suggest low is possibly formed, risk rebound to 0.8680, then 0.8700 but price should falter below said resistance at 0.8735, bring further choppy trading 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.