Trade Idea: EUR/GBP – Sell at 0.8900

EUR/GBP – 0.8809

Original strategy  :

Sell at 0.8980, Target: 0.8850, Stop: 0.9020

Position : –

Target :  –

Stop : –

New strategy  :

Sell at 0.8900, Target: 0.8780, Stop: 0.8940

Position : –

Target :  –

Stop : –

 
The single currency extended yesterday selloff and dropped to as low as 0.8774, suggesting the reversal from 0.9307 top is still in progress and bearishness remains for this fall to extend weakness towards 0.8737-43 (61.8% Fibonacci retracement of 0.8384-0.9307 and previous support), however, near term oversold condition should limit downside to 0.8719 support and reckon another previous chart support at 0.8652 would hold, bring rebound later. 

In view of this, would not chase this fall here and we are looking to sell euro on recovery as resistance at 0.8907 would limit upside and bring another decline later. Above 0.8940-50 would defer and risk a stronger rebound to 0.8975-80 but price should falter below 0.9000 and bring another selloff next week.

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.