Trade Idea: EUR/GBP – Buy at 0.8390

Elliott Wave Daily | Written by Action Forex 

EUR/GBP – 0.8469

Recent wave: v of wave 3 has possibly ended at 0.8067 but wave 4 should hold below 0.8600

Trend: Down

Original strategy : 

Buy at 0.8390, Target: 0.8510, Stop: 0.8330

New strategy : 

Buy at 0.8390, Target: 0.8510, Stop: 0.8330

Although the single currency has retreated after last week's rise from 0.8334 to 0.8527 and consolidation with mild downside would be seen, if our view that a 5-waver from 0.8941 top has ended at 0.8334 holds true, downside should be limited to 0.8390/00 and said support should continue to hold, bring another rebound later. A break of said resistance would add credence to our near term bullish view and bring retracement of the decline from 0.8941 to 0.8565/70 (38.2% Fibonacci retracement of 0.8941 to 0.8334) but resistance at 0.8595/00 would cap upside.

In view of this, we are still looking to buy euro on dips. Below said support would signal the aforesaid decline from 0.8941 is still in progress and extend weakness to 0.8300/10 before prospect of another rebound.

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. Above psychological resistance at 0.9000 would signal the (C) leg has ended and bring stronger rebound towards 0.9100.