Trade Idea: EUR/GBP - Buy at 0.8575

EUR/GBP - 0.8644

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 0.8575, Target: 0.8675, Stop: 0.8535

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.8575, Target: 0.8675, Stop: 0.8535

Position : -

Target :  -

Stop : -

As the single currency retreated after our anticipated rise to 0.8675, suggesting consolidation below this level would be seen and pullback to 0.8600-05 cannot be ruled out, however, still reckon downside would be limited to 0.8570-75 and bring another rise later, above said resistance at 0.8675 would extend recent rise from 0.8312 low to 0.8700 but loss of upward momentum should prevent sharp move beyond resistance at 0.8735, risk from there is seen for a retreat later.

In view of this, would not chase this rise here and would be prudent to buy euro again on pullback as 0.8575-85 should limit downside. Below 0.8550 would defer and suggest top is possibly formed, bring subsequent test of said support at 0.8524, once this level is penetrated, this would provide confirmation.

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.

For trade ideas on other pairs, visit trade idea section.