EUR/GBP – 0.8839
Original strategy :
Sold at 0.8950, Target: 0.8820, Stop: 0.8990
Position : – Short at 0.8950
Target : – 0.8820
Stop : – 0.8990
New strategy :
Hold short entered at 0.8950, Target: 0.8820, Stop: 0.8920
Position : – Short at 0.8950
Target : – 0.8820
Stop : – 0.8920
Although the single currency rose to 0.8982, lack of follow through buying and the subsequent selloff has retained our bearishness and downside bias remains for the fall from 0.9015 to extend weakness to support at 0.8792, however, break there is needed to signal the rebound from 0.8733 has ended at 0.9015 earlier this month, bring subsequent fall towards 0.8765-70.
In view of this, we are holding on to our short position entered at 0.8950. Above previous support at 0.8915 (now resistance) would defer and prolong choppy trading, risk rebound to 0.8935-40, however, still reckon said resistance at 0.8982 would cap upside and bring another retreat later. Only above indicated resistance at 0.9015 would risk test of previous resistance at 0.9033 but only a breach of this level would signal an upside break of recent established broad range has occurred, then subsequent rise to 0.9070-75 would follow.
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.
