Trade Idea: EUR/GBP – Stand aside

EUR/GBP – 0.8424

 
Recent wave: Major double three (A)-(B)-(C)-(X)-(A)-(B)-(C) is unfolding and 2nd (A) has possibly ended at 0.6936.

Trend: Near term down

New strategy  :

Stand aside

Position : –

Target :  –

Stop : –

 
Although the single currency broke above previous resistance at 0.8512, lack of follow through buying and the subsequent retreat from 0.8531 suggest consolidation with mild downside bias would be seen and weakness to 0.8400 cannot be ruled out, however, reckon downside would be limited to 0.8370-75 and as long as support at 0.8351 holds, prospect of another rebound remains. 

On the upside, expect recovery to be limited to 0.8470-75 and 0.8500 should hold, bring further consolidation later. Only break of said resistance at 0.8531 would add credence to our view that a temporary low has been formed at 0.8312 and extend the rebound from there for retracement of recent decline to 0.8550, however, reckon resistance at 0.8580 would limit upside and 0.8600-10 would hold from here. As near term outlook is mixed, would be prudent to stand aside in the meantime. 

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.