EUR/GBP – 0.8931
Original strategy :
Sold at 0.8930, Target: 0.8750, Stop: 0.8970
Position : – Short at 0.8930
Target : – 0.8750
Stop : – 0.8970
New strategy :
Hold short at 0.8930, Target: 0.8750, Stop: 0.8970
Position : – Short at 0.8930
Target : – 0.8750
Stop : – 0.8970
As the single currency faltered below indicated resistance at 0.8970 and has retreated, retaining our bearish view and as long as this level holds, prospect of another retreat remains, below support at 0.8850 would signal top is formed, bring further fall to 0.8820-25 but break of 0.8800-05 is needed to signal the rebound from last month’s low at 0.8746 has ended, then subsequent decline to 0.8770 would follow.
In view of this, we are holding on to our short position entered at 0.8930. Above said resistance at 0.8970 would signal the rise from 0.8746 low is still in progress for retracement of early decline to psychological resistance at 0.9000 but reckon previous resistance at 0.9048 would remain intact.
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.
