EUR/GBP recovered last week but stayed below 0.8643 minor resistance. Outlook is unchanged and intraday bias remains neutral first. Fall from 0.8851 is seen as the third leg of the corrective pattern from 0.9304. Below 0.8445 will target 0.8303 low first. Break will confirm our view and target 0.8116 key cluster support level. However, on the upside, break of 0.8643 will invalidate our view. In that case, intraday bias will be turned to the upside for 0.8851 to extend the corrective pattern from 0.8303.
In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. Deeper fall cannot be ruled out yet. But we’d expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Overall, the corrective pattern would take some time to complete before long term up trend resumes at a later stage. Break of 0.9304 will pave the way to 0.9799 (2008 high).
In the long term picture, firstly, price action from 0.9799 is seen as a long term corrective pattern and should have completed at 0.6935. 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 consolidation from 0.9304 completes, we’d expect another medium term up trend to target 0.9799 high and above.
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