Trade Idea: EUR/GBP – Buy at 0.8660

EUR/GBP – 0.8737

 
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

Original strategy  :

Buy at 0.8600, Target: 0.8700, Stop: 0.8560

Position : –

Target :  –

Stop : –

New strategy  :

Buy at 0.8660, Target: 0.8760, Stop: 0.8620

Position : –

Target :  –

Stop : –

 
As the single currency has continued moving higher after breaking above resistance at 0.8646, adding credence to our view that the fall from 0.8857 has ended at 0.8403 and upside bias remains for the rally from there to extend further gain to 0.8750, then 0.8770, however, loss of near term upward momentum should prevent sharp move beyond latter level and price should falter well below 0.8800, risk from there is seen for a retreat to take place later.

In view of this, would not chase this rise here and we are looking to buy euro on pullback as 0.8600 should limit downside. Below support at 0.8547 would suggest first leg of rebound from 0.8403 has ended, bring weakness to 0.8520-25 but support at 0.8509 should contain downside and bring another rise later. 

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.