No change in the long held, longer term view in eur/gbp as the market continues to form a large falling wedge since last Dec, generally seen as a reversal pattern and suggesting an eventual upside resolution (likely sharp). However as been warning for months, these patterns break down into 5 legs and currently targets a final fall back to the June low at .8405 and even the base of the pattern first (currently at .8245/60, see “ideal” scenario in red on weekly chart below). So for now, would continue with the strategy of fading the extremes of this 9 month pattern, but with the expectation of a longer term chance to buy a few weeks/month ahead (and likely at lower levels). Note too that a close above the ceiling would greatly increase the likelihood that an important bottom is already in place.
Nearer term in the Aug 28th email and the market near the ceiling of the large wedge, said to take profits on the Aug 18th buy at .8540 and even reverse to the short side (then at .8810 for a 270 tick profit). The market has chopped since then, even reversing lower after yesterday’s slight break above the ceiling of the wedge (bearish false break, see daily chart below), and suggesting that a downside acceleration may be ahead. Note too that nearby support is seen at .8700/10 (both the previously broken July highs and last week’s low), with a break below there potentially triggering such a move downward. For now, would stop on a close above the ceiling (incorporating the slight break above, currently at .8820/30).
