EUR/GBP – 0.9220
Original strategy :
Buy at 0.9200, Target: 0.9320, Stop: 0.9160
Position : –
Target :Â –
Stop : –
New strategy :
Buy at 0.9145, Target: 0.9295, Stop: 0.9105
Position : –
Target :Â –
Stop : –
Â
As the single currency has finally retreated after rising to 0.9307 yesterday, suggesting a temporary top has been formed there and consolidation below this level would be seen with initial downside bias for correction to 0.9189 support, however, reckon downside would be limited to 0.9145-50 (38.2% Fibonacci retracement of 0.8892-0.9307) and bring rebound later, above 0.9270-75 would suggest the pullback from 0.9307 has ended and bring retest of this level, break there would extend the major rise from 0.8304 to 0.9335-40 but weakening of near term upward momentum should prevent sharp move beyond 0.9365-70 and price should falter below 0.9395-00.
In view of this, would not chase this rise here and would be prudent to buy euro on subsequent pullback as 0.9145-50 would limit downside. Below support at 0.9111 would abort and risk correction of recent upmove to 0.9095-99 (50% Fibonacci retracement of 0.8892-0.9307), however, reckon 0.9050-51 (61.8% Fibonacci retracement and previous support) would hold, bring rebound later.Â
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.
