Trade Idea: EUR/GBP - Hold long entered at 0.8530

EUR/GBP - 0.8597

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 down

Original strategy:

Bought at 0.8530, Target: 0.8630, Stop: 0.8490

Position: - Long at 0.8530

Target:  - 0.8630

Stop: - 0.8490


New strategy:

Hold long entered at 0.8530, Target: 0.8630, Stop: 0.8520

Position: - Long at 0.8530

Target:  - 0.8630

Stop: - 0.8520

 
As the single currency found renewed buying interest at 0.8524 and has staged a rebound, retaining our view that recent upmove from 0.8312 would resume after consolidation, above resistance at 0.8615 (this week’s high) would confirm and extend further gain to 0.8630, having said that, as this move is viewed as retracement of recent decline, reckon upside would be limited to 0.8650-60, risk from there is seen for a retreat later.

In view of this, we are holding on to our short position entered at 0.8530. Below said support at 0.8524 would defer and suggest top is possibly formed, bring weakness to 0.8480-85 and possibly towards support at 0.8457 but break of previous resistance at 0.8452 is needed to confirm and bring test of support at 0.8423 first. 

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.