EUR/GBP jumped to as high as 0.8614 last week but turned sideway since then. Initial bias remains neutral this week for consolidations first. But near term outlook remains bullish as long as 0.8508 resistance turned support holds. Above 0.8614 will target 0.8786 resistance next. Overall, price actions 0.9304 are viewed as a medium term corrective pattern that is extending. As EUR/GBP has just defended 0.8303 resistance. Break of 0.8786 could bring a retest on 0.9304 high. On the downside, below 0.8508 minor support will turn bias back to the downside for 0.8383 support instead.
In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. In case of deeper 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. Rise from 0.6935 (2015 low) will resume at a later stage to 0.9799 (2008 high). However, sustained break of 0.8116 could bring deeper decline to next key support level at 0.7564 before the correction 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.
