EUR/GBP – 0.8841
New strategy :
Sell at 0.8865, Target: 0.8735, Stop: 0.8905
Position : –
Target : –
Stop : –
As the single currency has retreated after rising to 0.8939 late last week, suggesting consolidation below this level would be seen and weakness to 0.8800 is likely, however, break of support at 0.8765-70 is needed to signal the rebound from 0.8733 (last week’s low) has ended, bring retest of this level, break there would extend the fall from 0.9033 to 0.8700 but near term oversold condition should limit downside and reckon 0.8665-70 would remain intact.
In view of this, we are looking to sell euro on recovery as 0.8870-75 should limit upside. Only above 0.8910-15 would abort and signal the retreat from 0.8939 has ended, bring retest of this level first, break there would extend the rise from 0.8733 to resistance at 0.8957, however, break of 0.8976 resistance is needed to signal the fall from 0.9033 has ended instead, bring further gain to 0.9000, then retest of 0.9033 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.
