Trade Idea: EUR/GBP – Buy at 0.8925

EUR/GBP – 0.8951

 
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 up

Original strategy  :

Buy at 0.8925, Target: 0.9025, Stop: 0.8885

Position : –

Target :  –

Stop : –

New strategy  :

Buy at 0.8925, Target: 0.9025, Stop: 0.8885

Position : –

Target :  –

Stop : –

 
The single currency rebounded after finding support at 0.8891, suggesting the pullback from 0.8995 has possibly ended there, hence retest of this level would be seen, however, break there is needed to confirm upmove has resumed for test of psychological resistance at 0.9000, then 0.9020 but reckon upside would be limited to 0.9050 due to overbought condition, risk from there has increased for a retreat later.

In view of this, would not chase this rise here and would be prudent to buy euro on dips as 0.8920-25 should limit downside. A break of said support at 0.8891 would defer and suggest a temporary top is formed instead, bring correction to 0.8860-65 but only break of support at 0.8829 would provide confirmation, bring correction to 0.8800 first. 

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.