EUR/GBP stayed in consolidation from 0.8994 last week and outlook is unchanged. Initial bias is neutral this week first. Downside of retreat should be contained by 0.8828 to bring rise resumption. Whole rally from 0.8312 is still in progress and break of 0.8994 will target 0.9304 key high. There is no clear sign of up trend resumption yet. Hence, we’ll be cautious on strong resistance from 0.9304 to limit upside and bring another fall. However, break of 0.8828 will turn focus back to 0.8742 support. Break there will indicate near term reversal.
In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. It’s uncertain whether it is finished yet. But in case of another fall, we’d expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside and bring rebound. Whole up trend from 0.6935 is expected to resume after consolidation from 0.9304 completes.
In the long term picture, firstly, price action from 0.9799 (2008 high) is seen as a long term corrective pattern and should have completed at 0.6935 (2015 low). Secondly, rise from 0.6935 is likely resuming up trend from 0.5680 (2000 low). Thirdly, this is supported by the impulsive structure of the rise from 0.6935 to 0.9304. Hence, after the correction from 0.9304 completes, we’d expect another medium term up trend to target 0.9799 high and above.
