EUR/GBP – 0.8775
New strategy :
Stand aside
Position : –
Target : –
Stop : –
As the single currency has remained under pressure after breaking below support at 0.8774, suggesting the selloff from 0.9307 top is still in progress and mild downside bias remains for this move to extend weakness to 0.8737-43 (61.8% Fibonacci retracement of 0.8384-0.9307 and previous support), however, near term oversold condition should limit downside to 0.8719 support and reckon another previous chart support at 0.8652 would hold.
In view of this, would not chase this fall here and would be prudent to sell on subsequent rebound. Above 0.8850 would prolong consolidation and bring another bounce to 0.8886, then resistance at 0.8899, however, still reckon upside would be limited to 0.8940-50 and bring another decline later. Above previous support at 0.8982 would abort and signal a temporary low has been formed, bring retracement of recent decline to 0.9000 but price should falter below resistance at 0.9048 and bring another selloff 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.
