EUR/GBP – 0.8046
New strategy :
Sell at 0.8100, Target: 0.7970, Stop: 0.8140
Despite intra-day brief retreat to 0.8007, current rebound has retained our view that near term upside risk remains for the rebound from indicated support at 0.7861 to bring another bounce to 0.8070-75, however, reckon upside would be limited to 0.8100 and bring another decline later, a break of 0.8000-08 would bring another test of said support but below there is needed to extend the decline from 0.8165 for a deeper correction of recent rise to previous support at 0.7920-25, having said that, loss of momentum should prevent sharp fall below there and reckon 0.7900 would hold from here.
In view of this, we are still looking to sell euro on further recovery. Only a firm break of 0.8115 would suggest the correction from 0.8165 has ended instead and risk a stronger rebound to 0.8130 and possibly towards said resistance which is likely to hold on firs testing.
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.
IMOH, Patrick E.
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