Dear Traders,
The EUR/GBP produced a strong bearish drop, as anticipated in the previous analysis. Today’s post will provide a short-term update for this pair.
The EUR/GBP created a sharp drop from the Jun 1 high. Unfortunatelyteh swing stopped short of the channel support line (blue) and created a significant counter rally. This makes the next moves less easy to predict.
Scenario 1 (white lines): At least one more impulsive drop (which already started at the time of this writing) should take price into a new low and retest the lower channel support trendline. This would complete another ABC within Y and (purple) and potentially complete the entire sideways move and clearing the way clear for a bullish break that should reach at least 0.89 in a worst case scenario (i.e roughly 100% of Yellow Wave A and previous resistance).
Scenario 2 (red lines): Leaves the possibility of a further complication within the correction on the table, requiring anotehr ouple of zigzags before fully complete. However even this scenario should create only a very marginal lower low compared to the white scenario, which makes buy positions based on the white scenario already valid.
Ultimate invalidation for both scenarios lies at 0.8620 but a break of the lower channel line would already be a big warning sign that something else is afoot. A bullish bounce at the channel support with a good 4 hour candle close and a prior slow down of bearish momentum could be a valid buy signal therefore, targeting 0.89 and beyond.
All the best along your trading journey
Hubert
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