Trade Idea: EUR/GBP – Stand aside

EUR/GBP – 0.8423

 
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 : –

 
As the single currency has retreated after meeting resistance at 0.8509 late last week, retaining our view that further consolidation would be seen but only a break of indicated support at 0.8405 would signal the rebound from 0.8312 has ended, bring further fall to 0.8370-75, however, support at 0.8351 should remain intact, bring another rebound later.

On the upside, above 0.8475-80 would bring test of said resistance at 0.8509, however, reckon upside would be limited to resistance at 0.8531 and bring retreat later. Only a break of this level 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.