EUR/GBP – 0.8540
EUR/GBP – The major (A)(B)(C)-(X)-(A)(B)(C) correction from 0.9805 is unfolding and 2nd (A) has possibly ended at 0.6936.
This week’s rally above indicated previous resistance at 0.8531 adds credence to our view that another leg of corrective rise from 0.8312 is underway and above this week’s high at 0.8615 would extend gain to 0.8650-60 and possibly towards 0.8700, however, as broad outlook remains consolidative, reckon upside would be limited and resistance at 0.8735 should cap upside, bring further choppy trading later.
Our latest preferred count is that the wave V of a 5-wave series from 0.5682 ended at 0.9805 earlier and major from there has possibly ended at 0.8067 as A-B-C-X-A-B-C. We are keeping our view that the entire correction from 0.9805 has possibly ended at 0.7756 and as labeled as the attached daily chart and impulsive move from 0.9084 has ended at 0.7756 as a 5-waver which marked either the (C) wave or the A leg of (C), a daily close above resistance at 0.8831 would suggest (C) leg has ended and headway towards 0.9084.
On the downside, whilst initial pullback to 0.8500-05 cannot be rule out, reckon 0.8455-60 would limit downside and bring another rise later. Below 0.8425-30 would abort and signal top is formed instead, bring test of indicated support at 0.8384 (last week’s low), however, only a daily close below there would shift risk back to downside and signal the rebound from 0.8312 has ended, then further fall to 0.8350-60 would follow.
Recommendation: Buy at 0.8500 for 0.8650 with stop below 0.8400
Euro's long term uptrend started in Feb 1981 at 0.5039 and is unfolding as a (A)-(B)-(C) move with (A): 0.8433 (Feb 1993), (B): 0.5682 (May 2000) and impulsive wave (C) should have ended at 0.9805 with wave III ended at 0.7254 (May 2003), triangle wave IV at 0.6536 (23 Jan 2007) and wave V as well as wave (C) has ended at 0.9805.
We are keeping an alternate count that only wave III ended at 0.9805 and the correction from there is the wave IV and may extend weakness to 0.7700, however, it is necessary to see a daily close above resistance at 0.9143 would change this to be the preferred count.