Trade Idea: EUR/GBP – Buy at 0.9115

EUR/GBP – 0.9270

Original strategy  :

Buy at 0.9145, Target: 0.9295, Stop: 0.9105

Position : –

Target :  –

Stop : –

New strategy  :

Buy at 0.9115, Target: 0.9235, Stop: 0.9175

Position : –

Target :  –

Stop : –

 
Although the single currency has slipped again today and near term downside risk remains for the corrective fall from 0.9307 top to extend weakness to 0.9145-49 (38.2% Fibonacci retracement of 0.8892-0.9307), reckon 0.9110-15 would limit downside and bring rebound later, above 0.9220-25 would bring test of resistance at 0.9238 but a firm break above latter level is needed to signal the correction from 0.9307 has ended, bring retest of this level, break there would extend the major rise from 0.8304 to 0.9335-40 and 0.9365-70.

In view of this, we are inclined to buy euro on next corrective fall and would be prudent to exit on such rebound. Below 0.9095-00 (50% Fibonacci retracement of 0.8892-0.9307) would abort and signal top has been formed at 0.9307, bring correction of recent upmove to 0.9050-51 (61.8% Fibonacci retracement and previous support) 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.