Trade Idea: EUR/GBP - Buy at 0.8435

EUR/GBP – 0.8477

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 up

Original strategy  :

Buy at 0.8445, Target: 0.8585, Stop: 0.8400

Position : –

Target :  –

Stop : –

New strategy  :

Buy at 0.8435, Target: 0.8585, Stop: 0.8390

Position : –

Target :  –

Stop : –

Although the single currency has remained under pressure and near term downside risk remains for recent decline from 0.9576 top to extend weakness to 0.8450, loss of downward momentum should prevent sharp fall below 0.8430 and bring rebound later, above 0.8595 would bring test of 0.8639 resistance but break there is needed to suggest low is possibly formed, bring rebound to 0.8675-80, having said that, a breach of resistance at 0.8707 is needed to provide confirmation.

In view of this, would not chase this fall here and we are inclined to buy euro on next decline. Below 0.8400 would risk weakness to 0.8370-75, however, still reckon sharp fall below there would not be repeated and price should stay above 0.8350, bring another rebound 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.

Trade Idea: EUR/GBP - Buy at 0.8435